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
Billcoleman lopw headshot

Reaping The Benefits Of Patience

Bill Coleman - Live Oak Private Wealth
Web mcwhorter 0012

Blue Economy Convergence Conversations With Acclaimed Futurist And Author Deborah Westphal

Heather McWhorter - UNCW Center for Innovation and Entrepreneurship
Kellyerola headshot lcflc

7 Signs It May Be Time For Hospice Or Palliative Care

Kelly Erola - Lower Cape Fear LifeCare

Trending News

Offices At Mayfaire Developer Plans Commercial Building In Leland's Waterford Area

Cece Nunn - Oct 14, 2021

Will $500M Development Across The River Sink Or Swim?

Cece Nunn - Oct 15, 2021

Wilmington Entrepeneur Launches MyPeriodPal

Johanna Cano - Oct 15, 2021

Leland Brewery Expected To Be Complete In 2022

Cece Nunn - Oct 14, 2021

NCino's Expansion Progresses At Wilmington HQ

Cece Nunn - Oct 15, 2021

In The Current Issue

Heroes Who Stay The Course

Heroes aren’t those who only rise to the occasion in a movie’s big fight scene. In the real world, they tend to be those who keep showing up...


Health Care Heroes: Community Achievement

The Community Achievement Health Care Heroes category honors an individual or team who successfully implemented a program addressing a probl...


Health Care Heroes: Health Care Professional

The Health Care Professional category honors any health care providers other than physicians or nurses whose performance is considered exemp...

Book On Business

The 2021 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Trying to Grow a Business?
2020 Health Care Heroes
2020 WilmingtonBiz 100