Transition Plan to Keep One, Sell One

How Platinum assisted a family’s generational transition of two businesses

Situation

The founder and owner of two family businesses experienced a series of events that signaled the need to move away from full-time work. An attempt to sell an Internet content business to a private equity group failed at the eleventh hour. The other business, a large-format graphics printer, was growing profitably. Health challenges for the owner’s wife accelerated timing for transition planning. Three children were not involved in the businesses, yet had strong interests in how transition plans would impact the next generation’s needs. Platinum Group was invited through business colleague relationships to provide transition-planning help..

Challenges

  • The owner was not ready to totally step away from these growing businesses, but needed time to care for his wife and a daughter with special needs.
  • One business had a proven leader with long-term potential, and the other had a relatively new leadership team in a fast-changing technology driven market.
  • Growing interests in community service and travel were not feasible given business leadership demands.

Response

Platinum provided an information-gathering process that included, family, financial and business advisors. All family members and owners were interviewed to gain independent perspectives of the business and their vision for the future, both business and personal interests. Work completed or in process for estate, financial, tax and trust matters was summarized and reviewed. A family council meeting was subsequently held with all family members, including spouses, to share their opinions on the two businesses and personal intentions. The family meeting identified agreement on retirement rewards for the founders, providing care for the special-needs daughter, independent careers for all the children and spouses, and succession planning needed for both companies.

Results

This clarity triggered a succession plan with the transfer of ownership control by purchase and gifting to an effective leader of the profitably growing graphics business. The founders retained ownership of the Internet content business and continued with an internal leadership team, advised one day a week by the founder. Both sons were invited to serve on this company’s board of directors for continuity and more open communication with the family, but not involving any operational roles in the business. A year later, a life trust for the special-needs daughter was established with caregiving authority to parents, brothers and spouses. The founder and his wife are now more active in community and social entrepreneur projects through their church, and traveling. Both businesses are growing profitably with minimal involvement of the founders.

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