Hidden Dragons: Handling Family Conflicts in Buy-Sell Agreements for Business Succession

White, Paul E.
January 2007
Journal of Financial Planning;Jan2007, Vol. 20 Issue 1, p70
Academic Journal
Buy-sell agreements are used as the foundation for transferring family-owned businesses across generations. For the process to be successful, relational issues are critical to understand and address. Astute financial advisors will understand that business succession can involve complex family issues and will use a process that addresses these. • Two common approaches by advisors can create problems: (1) avoiding the relational issues or (2) trying to resolve all the relational issues present in the family. Rather, the goal is to address only those relational issues intertwined with the business succession plan. • The article discusses five common relational traps advisors can be drawn into by family members that will create significant obstacles. These include one family member keeping secrets from another family member, the advisor becoming a messenger between family members (to avoid conflict), or attempting to make everyone feel good and have no negative interactions. • The article suggests practical steps to avoid these relational quagmires. The process should include clarifying and articulating the current owner's goals for themselves and the future of the business, investigating the goals and desires of the primary owner's spouse, discussing the next generation's desires for ownership and participation in the business. • Another key is attending to other possible hidden relationship issues such as conflicts among family members, important past family events, and loyalty to long-term, non family managers.


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