In this issue
As a child in Guatemala, Rodolfo Paiz got a ride to and from school each day—from a bodyguard. His family, owners of a prosperous grocery chain, instituted the security measure around 1978, after a 12-year-old cousin was kidnapped. The cousin returned home unharmed, “but nobody forgot about that,” says Paiz, who now is 38 and has a family business consultancy, Guayacan Group, based in Miami.
When Dave Shatilla started working in his family’s business at age 15, he was already drinking heavily. The company, KDDisplays, based in Mississauga, Ontario, Canada, designs and manufactures point-of-sale displays for clients that include watercraft manufacturer Sea-Doo.
Transitioning ownership of a family business is fraught with risk. Even if your business and your family are running like well-oiled machines, the process is likely to take you into uncharted territory. If poorly handled, the emotional, psychological and business complexities that inevitably arise can lead to squandered wealth and wasted opportunities. Even worse, a business transition can set off a chain reaction that results in a fractured family.
Approximately one third of the Fortune 500 can fairly be described as family-controlled companies, and while family members in these companies usually are not the majority stockholders in a technical sense, in many cases they still maintain a significant degree of control through positions on the board of directors. This level of control has assuaged family members’ fears that the company would become unable to adhere to the family’s strategic vision and the guiding principles of the founder.
Eighteen of the 94 new members of the House of Representatives have family business connections. Two of them are women. All of them are Republicans. Seventeen of the new members of Congress currently are involved in their family companies; one worked at his family’s firm when he was younger.
Of the 13 new members of the U.S. Senate, one is currently involved in a family business; two previously worked in family enterprises. Like the newly elected members of Congress with family business ties, all three of these senators are Republicans.
Every family business must have a workable buy-sell agreement, but in the absence of a triggering event, how can you know yours is workable?
Buy-sell agreements are some of the least understood, yet most important, corporate documents. These agreements establish the mechanism for the purchase (and corresponding sale) of equity interests upon the occurrence of certain trigger events, such as a shareholder quitting, being fired, retiring, becoming disabled, dying or divorcing.
The movie Inception is full of intense action scenes, new-age special effects and intriguing concepts. Critics have dissected its multi-layered plot. Yet, Hollywood hype aside, the movie portrays many facts, fictions and biases about family businesses.
The Comedy Store is a fixture of Hollywood and one of the world’s best-known comedy clubs. Opened in 1972 and operated by the Shore family since the early 1970s, the Comedy Store launched the careers of Johnny Carson, Jay Leno and David Letterman. Lately, however, ownership and operation of the Comedy Store have not yielded many laughs for the Shore family.
Brewster Home Fashions, in Randolph, Mass., is one of the oldest independently owned manufacturers and distributors of wallpaper and other wallcovering products in the U.S. It’s also a family business determined to survive despite economic turmoil and the transformation of its industry.