Defining roles of managers and owners

By Charlotte Lamp

Paul Sr., a true entrepreneur, spotted a need in the marketplace for a well-made widget. Little did he envision the wild success of his enterprise. With this success, Paul Sr. realized he could provide employment for his offspring and that one day the business might be theirs. The eldest second-generation sibling became a physician; the other three joined the business and over the years became successful managers in their respective departments. All of the four siblings married and had their own offspring. The ten children of the family managers grew up in a close cousin environment because of their parents' work; hence, they spent a lot of time together. The three children of the eldest sibling, who was not part of the business, were less connected to their cousins.

At age 70, Paul Sr. began to think about retirement, what to do with the company and how to structure his estate. He quietly made the decision that since the eldest sibling had done well as a physician and had nothing to do with the company, a fourth of Paul Sr.'s outside investments would suffice as his inheritance. The three siblings who worked in the company would inherit their share of the outside investments and would also inherit the company itself. After all, they had helped make the company successful.

Issue: 
March/April 2014

OTHER RELATED ARTICLES

  • A higher calling

    The year was 1982. After an antitrust lawsuit that had dragged on for eight years, the U.S. Department of Justice mandated that AT&T Corp. end its vertically integrated monopoly on telephone se...

  • The pros and cons of debt

    For many family business owners, debt is a four-letter word that’s synonymous with risk, vulnerability and outside control.

    Take Gregory Pettinaro, managing partner of Pettinaro Enterprises...

  • Valuation: A worthy cause

    Most multigenerational family companies eventually will buy out a family shareholder, or at least redeem some stock held by a family member. Sometimes it’s the culmination of a planned transition...

  • Survey results offer insights on competitiveness

    How important is talent management to family businesses? It’s a major, pressing concern, according to a new survey of U.S. family business leaders by global professional services firm PwC. The pe...