In a recent on-line seminar Frederick D. Lipman, Esq. discussed the Best and Worst Practices in Family Businesses. Fred is an internationally known authority on business law, has authored 12 books with his most recent being The Family Business Guide. He has lectured internationally and nationally including at the University of Pennsylvania Law School and is with Blank Rome LLP Counselors at Law.
Fred began his discussion by describing what he believes are four Success Factors for the successful transition of the Family Business.
1.The Economic opportunity the business provides the family.
2.A business with a stable product.
3.Clearly defined and explicitly written Dispute Resolution policies.
4.The positive mentoring of successive generations.
Fred reiterated, throughout his presentation, that he believes Divorce is the major risk in every family business and therefore requires the proper agreements and policies, in writing and signed. It is the responsibility of the founder of the business, or the senior generation, to put in place legal mechanisms to resolve disputes and not allow the business to be jeopardized.
A few of the topics that Fred provided the Best and Worst Practices included; Mentoring the Next Generation; Succession Planning; Shareholder / Owners Agreements; Pre-Nuptial Agreements; Selling the Family Business; and Taking the Family Business Public to name just a few.
This virtual seminar provided many golden nuggets of information, do’s and don’ts for the Family in Business that truly desires to build the business legacy for the family.
There are four key items that families need to begin working on immediately:
1.Examine your family’s position and/or policies for these critical issues and determine what your family wants and needs as they establish the transgenerational legacy.
2.Communicate, Communicate, Communicate clearly and appropriately with the family what is going on, be transparent in the goals and put the protection in writing.
3.Then sign and execute to documents, agreements, and policies to protect the business and family.
4.This process requires a team of experts; a Family Business Consultant, a Family Business Attorney, and a Family Business Accountant.
If you would like to discuss these critical issues in greater detail, please contact me, I would be happy to talk with you.