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Information Case Studies Case Study 4

Case Study 4: Family-Owned Manufacturers Secure Asset and Attract New Management

A manufacturing business was owned equally by three families. Two owners had 15 years of work ahead of them, and one was within five years of retirement. It had a significant work force on the factory floor. Two sons worked in the business.

BizSuccession Solutions was asked to look at longer-term succession, as well as immediate succession strategies. In this case, equity was not to be relinquished by any of the families in the event of death or disability striking an existing director.

However, the two sons involved in the business – and the designated future part-owners of the business - were unwilling to take up any management responsibilities.

We were able to draft a document that separated equity rights from the management and directors' roles. The planning addressed the active recruitment of external executives with the required management and industry experience. The business succession agreement set up how this would work, including a small but equal allocation of equity from each of the three families to form a pool to provide some ownership by the proposed new CEO.

The immediate exit strategy planning was able to allow equity to a potential CEO; but was also designed to allow the business to remove the manager – and retrieve equity at a fair price - if necessary , without the spectre of litigation.

The three families are now secure that a family asset will not be lost and the business will continue with competent management.

Testimonials

Sean says

We are in business with my parents and brother. Some land had been transferred to my brother and I and we asked Jim to prepare a immediate exit strategy in case one of us had or wanted to withdraw. We sought bank finance to improve the land. Jim was able to do that plus discover a error in how the land was transferred that the bank had missed. Since then my brother has left the state and he is being paid out exactly as we set up; no argument.