A common part of our business and commercial law practice is working with successful business owners who reach the point where they are ready to bring more junior employees into the company as owners. Sometimes this need is brought about by the business owner’s appreciation for the skill and devotion of a long-term employee, and sometimes it is prompted by the need to tie that employee to the business going forward. More often it is prompted by the owner’s recognition that his own exit strategy is linked to the continuity of his company, which can best be achieved by spreading out the ownership.
The need is much more acute when the business owner has a child or several children working in the business. In such situations, sibling rivalry can pose significant threats to the future of the company and to the owner’s peace of mind as he seeks to gradually step down from daily management.
Our experience with generational transfers, whether or not they include the business owner’s children, is extensive and includes understanding of family dynamics, business necessity, and the tax and estate planning consequences of such transfers. Generational transfers require planning, sometimes years in advance, to optimize the transition from management by the founding owner to management by a second or third tier employee.
When the business owner takes the initiative to plan for the change of control, it works more smoothly than when the change of control was not planned, as in the case of death, a sudden medical disability, or other such unforeseen event.
Feel free to contact me to discuss generational transfer, its implications, possibilities, and pitfalls.
T. Jay Seale
About the Author: I began the practice of law in Hammond in 1973 as a solo practitioner. Over time I took in partners, hired associates and built what is now the largest law firm on the North Shore of Southeast Louisiana, comprised of eighteen lawyers whose skills are spread into many different practice areas, including general business representation, litigation in state and federal courts as well as ADR (Alternate Dispute Resolution such as arbitration and mediation of business disputes), and corporate consultation on business formations, mergers and acquisitions, and intellectual property. The firm also has three Board Certified tax and estate planning specialists. Ours is a full service law firm combining the legal expertise of larger firms in urban markets with the community values and virtues of a smaller, more personal practice. I’d like to invite you to contact us today with any questions you may have about how to implement or enhance your vision for your company’s future.