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
Img 1576c1

Too Much Debt is Dangerous for the Stock Market

Eddie Nowell - South Atlantic Capital Management Group
Infinity 891835159

Understanding PCI Compliance

Kyle Thorpe - Infinity Payment Systems
Img 0621

Tax Evasion Versus Tax Avoidance

Karen Durda - Century Accounting and Tax Services, Inc.

Trending News

CloudWyze Gets Its First Government Contract

Johanna Cano - Oct 18, 2018

TRU Colors Included In South By Southwest's Next Lineup

Vicky Janowski - Oct 19, 2018

Insurance Industry Sees A Flood Of Claims

Cece Nunn and Christina Haley O'Neal - Oct 19, 2018

Wilmington Area Home Sales Fell 48 To 63 Percent During Storm Month, Report Shows

Cece Nunn - Oct 19, 2018

Benefits Spring Up In Florence’s Wake

Staff Reports - Oct 19, 2018

In The Current Issue

Insurance Industry Sees A Flood Of Claims

As Ian Archibald awaited the arrival of a State Farm Insurance adjuster at his Wilmington home on Oct. 9, his mind was also on a much more d...


Cardinal Foods’ Growth Mode

Cardinal Foods LLC has expanded a market and operations for local farmers under the leadership of Corey Barnhill, founder, president and CEO...


Storm Updates Flew On Social Media

Robert McIntosh, owner of Coastal Cell Phone Repair in Wilmington, made a lot more “friends” than he expected during Hurricane Florence....

Book On Business

The 2018 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2018 Power Breakfast - Dishing on the Restaurant Biz
2018 WilmingtonBiz Expo - Keynote Lunch with Eric Dinenberg, Rouse Properties
2017 Health Care Heroes