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
Web awstaffpic2020 1 132245438

Profiles in Nonprofit Giving

Alesha Edison Westbrook - Cape Fear Literacy Council
Ubs chadpearson headshotresized

The Three Dimensions Of Selling Your Business

Chad Pearson - UBS Decision Point Wealth Consulting
Cfss headshots parker robert webversion 21422121214

North Carolina's 2023 Hurricane Season Predictions: Harnessing the Power of Solar Energy and Storage for Optimal Resilience

Robert Parker - Cape Fear Solar Systems

Trending News

For 348-townhome Project, Carroll Companies Reschedules Community Meeting

Staff Reports - Sep 25, 2023

Crossing That Bridge (and Road, Track, Sky And Water)

Cece Nunn - Sep 25, 2023

Culinary Blends At New Olivero Restaurant

Katie Schmidt - Sep 25, 2023

SeaTox, Partners Awarded $1.5M Grant For Contamination Testing In Alaska

Audrey Elsberry - Sep 26, 2023

Bowling, Murphy Join EmergeOrtho Coastal Region

Staff Reports - Sep 26, 2023

In The Current Issue

MADE Winners: Arts Category

A gallery, swimwear and handmade leather goods create buzz...


Spotlighting This Year’s MADE Awards

The purpose of the awards is to draw attention to manufacturers and makers in the Cape Fear region....


Startup Banks On User Needs

The fundraising from the company’s seed round, which was announced in late August, is just the latest multi-million-dollar capital fundraisi...

Book On Business

The 2023 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2023 Power Breakfast: Major Developments