Although some businesses arefamily owned, that doesnâ€™t necessarily mean they are run by members of thefamily. And in order to get those non-family members to approach the businesswith the same â€œfamilyâ€ mindset, many business owners are giving their employeesskin in the game.
The most common form of â€œskinâ€in the game is company stock. Done right, this approach can be a win-win forall parties involved. That said, great caution is due; beware, as described ina recent WealthManagement.com articletitled â€œThe Tyranny of Minority Shareholders.â€
Structuring your family businessfor the future is not an easy task. What of value in life is? While eachcompany and family is different, making a key employee a part owner certainlycan give them added incentive to run things when the family cannot or will not.
On the downside, you can createtension between the family owners and the key employee turned minorityshareholder. For example, conflicts can arise should the majority owners (i.e.,the family members) take actions in their own self-interests withoutconsidering the concerns of the minority owners (i.e., non-family members). Insome cases, a minority shareholder can be protected by state and federal lawsas in the case discussed in the original article regarding the Empire StateBuilding IPO.
Even if you do not own aninternational landmark, there are many ways you, your family, your non-familyexecutives, and, yes, your business, can find a happy medium. However, it takestime and qualified counsel to structure things correctly.
At IdahoEstate Planning we are the expertsyou need to know and trust. Work with us and we'll put together a plan thatworks for you and your loved ones. Remember, goodplanning is no accident.