Follow Dallas Linkedin
Email Dallas Email
Business Growth
Oct 22, 2015

Unintended Consequences

Sponsored Content provided by Dallas Romanowski - Managing Partner, Cornerstone Business Advisors

Stephen Manicek sat quietly and stared out the window of his car as it sat parked in the parking lot of Mayfaire Business Park. Until a few minutes ago, he had been president of his distribution company, one of the country’s largest telecommunications parts distributors. Now he was out of a job and felt he was a victim. Naturally, his first thought was to sue those responsible for his misfortune. The targets of his wrath were his younger sister and his mother. They had forced him out of the business. What should he do next? What could he do next?

After his father’s death, Stephen had received 49 percent of the stock in the family business. Another 49 percent share went to his sister. The remaining two percent – the swing vote – was held by their mother.

Stephen’s father had brought him into the business early and taught him well. After the founder’s death, Stephen assumed all responsibilities for sales and became the key man in the business. 

His sister, Clara, handled the bookkeeping and other administrative matters. Her husband managed the warehouse employees.

Despite ups and downs in the economy, the business thrived under Stephen’s stewardship. It had a long-standing tradition of excellent customer service and a good reputation because the elder Manicek had pioneered automation and distribution efficiency and tracking processes in the industry.

Because of his dedication to the business, Stephen had not spent much time nurturing family relationships. His relationship with his mother was not as close as that of his sister. As their mother aged, she became increasingly susceptible to the influences of her daughter. Family friction developed. A confrontation was inevitable.

Stephen had always assumed that his superior abilities and position as president and board chairman would enable him to prevail in any family dispute about the business. He was wrong. After many months of conflict over company strategy and financial performance, Stephen’s sister called a special meeting of the board of directors. Stephen was removed from his posts, fired as an employee, and given three months of severance pay after 20 years in the business.
 
Stephen naturally felt victimized ... but not so much by his sister and mother as by his deceased father. By failing in the most important remaining task in his life – to plan his estate – the elder Manicek made his son an unintended victim.

Stephen sat in his car and tried to understand where things had gone so terribly wrong.

The unfavorable business transition experiences described above may have been avoided had Stephen’s father asked – and answered with the help of an experienced business adviser – six critical questions.

  1. How can I provide for an equitable distribution of my estate among my children?
     
  2. Who should control and eventually own the family business?
     
  3. How can I use my business to fuel the growth of my estate outside of my business interests?
     
  4. How do I provide for my family’s income needs, especially those of my spouse and dependent children, after my death?
     
  5. How can I help preserve my assets from the claims of creditors during my lifetime and at my death?
     
  6. How can I minimize estate taxes?
Thoughtful answers to these questions, followed by appropriate decisions, actions and implementation, may well prevent a similar experience in other families and support a smoother business transition for all parties involved. Family harmony and the preservation of family relationships on a long-term basis continue to be top priorities of founding patriarchs and matriarchs of successful business families. The answers to these questions often permeate most or all of the decisions a business owner makes regarding the future of the business. Leaving these questions unanswered can create a myriad of unintended consequences.

If you have any questions about how a well-conceived estate plan interacts with a comprehensive plan for the future of a family business, please contact us to discuss your situation. Our business advisers can work with your financial advisers, accountants and attorneys to ensure your company has an exit plan that meets your objectives.

The Cornerstone team includes former C-Level executives, successful entrepreneurs and advisors who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. As a member of the Business Enterprise Institute (BEI), Cornerstone is an authorized distributor of BEI’s content and Exit Planning Tools.  We developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.launchgrowexit.com, call 910-681-1420, or email [email protected]

Other Posts from Dallas Romanowski

Bizjournalblockad
Ico insights

INSIGHTS

SPONSORS' CONTENT
Natalieenglish 3301715113

Advocacy: The Heart of the Chamber

Natalie English - Wilmington Chamber of Commerce
Hewet60

Stress Can Work For You

Ron Hewett - Academy Leadership
Aaeaaqaaaaaaaaidaaaajdhiztrkodm0lte2yjetngrkmy1hotrmltawmdvlmwqyztmymw

Put Happy In The New Year

Diane Durance - UNCW Center for Innovation and Entrepreneurship

Trending News

ILM Lands Boston Flight, Reaches 1M Passengers

Christina Haley O'Neal - Jan 14, 2020

Local Firm To Be Considered For Redevelopment Of Government Center

Cece Nunn - Jan 15, 2020

Big Sky Design Moving To Oleander Drive

Cece Nunn - Jan 14, 2020

Developers Plan Modern Industrial Building In Pender

Christina Haley O'Neal - Jan 15, 2020

Wrightsville Beach Brewery Plans Facility In Leland

Jessica Maurer - Jan 15, 2020

In The Current Issue

Startups To Watch In 2020

As technology becomes increasingly more embedded into our everyday lives, some Wilmington startups are on the rise....


Teaming Up: Are Public-private Partnerships In Area's Future?

Officials in the region and beyond are bringing public-private partnerships to the table as potential solutions to public needs that could a...


Packaged For Generations

Family firm Atlantic Packaging is putting the final touches on its newly expanded headquarters and opening a new location this month. ...

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 Health Care Heroes
August 26, 2019 Power Breakfast: A Healthy Sale?
2019 WILMA Leadership Accelerator
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`