The family business.

LegacyUser

Hi
I work in a family business. I have lots of brothers and sisters,but none of them were ever interested in getting involved.Iv been there now for over 10 years. At this stage now,I basically run the show.Iv built up a pretty good name for myself with both customers and suppliers and I like to think Iv created my own name for myself.The company is still owned 100% by my parents. At the moment the company is in the process of an ambitious expansion plan.

But I was dropped with a bombshell today. One of my parents told me that they plan to sell within the next 10 years. It was like a punch in the guts..I couldnt believe it. Up to now I always felt the natural progression for the company was for me to take over and run it. This has been the theory in my head almost my entire working life.

Its not that I ever expected something for nothing. My parents never gave me anything for nothing...I always worked for what I wanted,and the business included. Iv worked nights,worked long hours...12,13,14,worked weekends,worked christmas day,stephens day...Iv never had Patricks off!!....Iv done everything I can for the benifit of the company,to the point its effected my family life. I always told myself that its the downside to owning your own business.

I know its thier company...that theyre free to do as they like....but just feel a little let down that someone didnt tell me sooner what they planned to do,that maybe I could have started a career with a different company.

I do have a gut feeling that this is just my mother talking...and that if my father found out what she said he would go spare. She has no real interest in the company...she works maybe only 8-10 hours a week,whereas my dad and me put in an average 60+ a week.

But what should I do...should I just accept what my mother said and change my plans or should I stick it out and see what happens??

Gordon

Why don't you just aim for a 10 year plan to buy the business?

mikemac

Presumably your brothers and sisters and you are all going to get equal inheritance so it'll be sold when your parents can no longer manage it and want to take things easy.
And then your parents can get a lump sum and everyone else gets cash which be used as a deposit for a house or something.

Were you expecting to take it over and none of your siblings get any of it?

I know it seems harsh but I've often seen one farmers son get land worth hundreds of thousands and everyone else gets a couple of thousand. Hardly fair.

superhooper

Think you need to talk to your Father.
You should also be talking to them about inheritance and retirement planning from a tax point of view as this can be tricky if not planned correctly.

Tha Gopher

Micmlo- the rules of establishing who owns a farm are in good faith. Before the famine farms were divied by each son, if a farmer has four sons, gives an equal share, each son gives the same equal division to their own sons, soon people ended up farming land the size of a few suburban back gardens. Therefore the rule developed among the children who didnt emigrate post famine, he who worked the hardest got the most. Considering all that migrated it wasnt all that unfair. If i take my mothers mam and my fathers dad, both grandparents born in the contryside. Both in a family of 7, both born in the early 20s.

Grandads side- sister went to the US, another to Leeds, he and another brother went to Dublin, two went to London. One stayed and got the farm.

Grandmother- she went to Dublin, one brother on the farm, one migrated to neighbouring county town, and the other four went to Birmingham and London. Again, the Irish rural economy did a sort of natural selection. Those few who hung in there got the land. Those who left ended up in pokey rented or council flats/homes for decades. Mind you, neither of the above mentioned great uncles who eventually inherited ever married/had a family, became your stereotypical old country Irishmen with the cash under the matress, whereas all the migrants to Dublin/England eventually had families and, generally speaking, raised themselves to a better economic level than when they arrived post war/early 50s.

The OP is damn right. He put in more effort than his siblings yet, when the wills time approaches, he will get as much as they did for dedicating most of (from what he says) his teens and 20s to the business, while his siblings who did FA get the same monetary reward? Like any job in which my hard work wasnt appreciated, id take the bull by the horns and confront the bosses with the concern.

mikemac

Tha Gopher wrote:

Micmlo- the rules of establishing who owns a farm are in good faith. Before the famine farms were divied by each son, if a farmer has four sons, gives an equal share, each son gives the same equal division to their own sons, soon people ended up farming land the size of a few suburban back gardens. Therefore the rule developed among the children who didnt emigrate post famine, he who worked the hardest got the most.

Fully understand this already, thanks.
What I expect to happen if the OP does nothing is the business will be sold and everyone will get an equal split. Or the OP might get slightly more but still only a fraction of the business.

So what's fair? The OP dedicates himself to the business for little reward other than being a loyal son versus the brothers and sisters don't get money which could useful for a wedding/house/medical bills,etc and watch their brother become a millionaire.

Both options leave people feeling hard done by.
This needs to be discussed with the parents this month and next year tbh.

bigjohnny80

Tha Gopher wrote:

The OP is damn right. He put in more effort than his siblings yet, when the wills time approaches, he will get as much as they did for dedicating most of (from what he says) his teens and 20s to the business, while his siblings who did FA get the same monetary reward? Like any job in which my hard work wasnt appreciated, id take the bull by the horns and confront the bosses with the concern.

Unfair I feel as siblings may have also taken a brave choice to go do their own thing. Whos to say they
haven't put in as much effort into their own careers . . .We have a family business but I was always of the opinion that i would do my own thing but i do not expect my sister who chose to go into the business to inherit it all when the time comes. this is because i feel she was handed a ready made successful business. Whereas i chose to get a professional qualification and work my way up. Why should i be penalised or the OP's siblings either for simply not wanting to go into same business? would be interested to find out what the OP'situation is with siblings

randylonghorn

bigjohnny80 wrote:

Whos to say they haven't put in as much effort into their own careers . . .

No-one is saying it ... but they should expect their reward from their own hard work in their own careers, not from someone else's.

bigjohnny80 wrote:

i do not expect my sister who chose to go into the business to inherit it all when the time comes. this is because i feel she was handed a ready made successful business.

... and has presumably invested a lot of time and energy in it along the way, as the OP has.

bigjohnny80 wrote:

Whereas i chose to get a professional qualification and work my way up.

And your parents, and ultimately that same business, probably gave you financial support in doing so?

bigjohnny80 wrote:

Why should i be penalised or the OP's siblings either for simply not wanting to go into same business?

Why should your sister, or the OP's siblings, get the same cut out of the business as people who have invested far less in it?

I wouldn't suggest that the OP or your sister get everything, by any means, but in my view the person who has put in hard graft and energy over the years (assuming your sister has actually done so, rather just "being" there) is entitled to a substantially greater reward than those who have chosen, as they had every right to choose, to make their own lives elsewhere.

(Oh and btw, there is no family business / farm / whatever in my case, and anyway I would fall into the "went away" category. )

LegacyUser

A brief overview. My grandfather orignally owned the main business,but following a major family fallout my dad set up his on his own. The main reason for the family fallout was basically all his brothers and sisters were involved aswell,and as they say there were too many beaks to fill,so I know my dad wouldnt want to go along the lines of splitting the company up amongsnt us.Its just a recipie for disaster.Its also quite a specialised area,and takes years of experiance to understand fully the processess.
One poster asked what my relationship with my brothers and sisters are like,tbh id say pretty good. I talk with them often (but not about work).
As far as what they would get in a will,I always figured the best way to have organised it would be that because my parents have quite a large personal wealth in property,thet my brothers and sisters would have the rest of thier estate to split amongsnt them,and the business would be mine.

Gordon...you ask why I dont make a 10 year plan to buy the business?
The answer to that would be that in 10 years the value of the company will be( as long as all goes well) around the 8-10 million mark. Unless I brought in some outside investors I cant really see myself being able to drum up that sorta money.

I know I must sound like some sorta spoiled brat wanting something for nothing,but its that given the years of hard graft Iv put in,I KNOW ive been part of the reason the company has got to the point its at now.

Dord

Have you thought about starting your own company?

PeakOutput

hathor wrote:

Unless I brought in some outside investors I cant really see myself being able to drum up that sorta money.

so bring them in. also i assume if it was yourself that would buy it you get a discount unless your parents are real tight(no offence). so for example you get 3 investors to cough up one quarter each and you get your quarter for free or something like that.

the scenario with the will would more than likely end up with you having to buy your siblings out anyway and with all the furor that could cause maybe your parents want to avoid that by selling and just splitting the money evenly.

either way you need to talk to your parents and see what they say when you spell out for them that you saw your future in that business

james123

why dont you tell them how you feel!

Kingkong

Quite simple ask for a 25% stake in the business or you walk. There is some sort of tax relief available. Non of urs brothers ans sisters stuck around and worked in da business, screw them you put in the work. If there not willing to reward you for ur effort then walk. If you left in da morning only then wud they really appreciate ur contribution. Family business take there own for granted

ambro25

Seems to me a lot of you, incl. the OP perhaps, are missing a pretty essential point, here:

I understand from the OP that he works for the biz as an employee (a very dedicated one, but an employee all the same).

That's got nothing to do with ownership of it, therefore questions of will, relatives' share etc. are entirely moot.

The average, dedicated employee does not acquire any rights in the business he/she works in - only (if all things are fair etc.) better compensation/perks commensurate with the better performance.

In that context, Gordon is entirely right - plan on buying the biz from your parents, with/without external investors etc.

pretty-in-pink

OP, buy the business, investors or a commercial loan. Your parents may give you a discount, talk to them about the future of the business. if you want to stay in the business, you should expect to buy- a multi-million euro gift is a bit much.

LegacyUser

'Thanx for the replys guys.
people have told me for a long time that at this stage I should have some shares in the company,but its just not something Iv brought up so far with my parents.Maybe the time is right now.
As far as investors go,its not something I want to do.I know the company better than probably even my parents,so the thoughts of having others with a majority holding in the company is not the line I like to go down.

As far as setting up my own business,it is an idea Iv played around with. But I always come back to the same conclusion. If i did go on my own,Id end up competing with a company I helped to develop...id be trying to lure customers away from a company Iv worked so hard in bringing in,in the first instance.

My brothers and sisters some would say were the smart ones by not getting involved...theres truth to the saying never work with family or friends. Iv been through the mill with mam and dad on certain issues and the theory that you leave all work issues in work is rubbish....anyway,thats aonther story.

Maybe the real question I might be trying to ask is..am I being selfish and presumptuous by expecting that the company would have been left to me?

Im starting to think that maybe I should be looking for shares as some sort of gesture of goodwill. TBH,at the moment,because the company is growing so quickly,it does take the 3 of us to run it. I run the company day to day...dealing with all the general management duties, Dad has the vision for the comapny..develops where he thinks the company should be going( have to say now...he is very very good at this),and mam pops in and out every now and again to check on the clerical staff.

Thanx again guys...really appreciate the helpful comments'

sam34

why are your siblings expecting a payout when the parents sell up? its your parents business and when they sell theyll still hopefully have many years to live, and will want to have a good quality of life. plus, they have to plan for rainy days, eg maybe nursing home fees. theyre not going to want to divide up the money between all the kids who thay have reared and educated so that the kids can pay off mortgages/whatever, while the parents themselves have a lesser quality of life than they deserve. inheritance should be inherited when parents die,not before that, imo.
as for you, yes, i think youre in a slightly different position. but, i presume you have been properly paid all these years? imagine if you had been working in a business that wasnt family owned. and this business was to be sold. what would u be entitled to ? reasonable notice and a redundancy package.so why do you think youre entitled to more because its the family business?

edit: like ambro25 said, you are an employee and that doesnt give you a right to inheritance

cjs_surf

If they sell,

Make sure you have a full list of contacts.

That there is nothing in the sales contract to prevent you from setting up, you my be family but you are technically "just an employ", even though you'd win if the buyer takes you to court you'd spend a lot defending the case.

Or

Talk you your folks, they are about to invest a lot in expanding the company now is a good time to buy / get a stake a stake in the company.

No you're not being selfish it's a family business, you're family and you work in.

Before you approach them make sure you have enough information contacts.... talk to a financial adviser about how to got about raising money to inverts in the business.

That way you have a stake in company and record of with banks ... if they out vote you and sell you will at least get the growth in the company as a return on your investment.

maybe aim to buy 10 to 15% and get 10 to 15% in return for all the work you've done.

Pub07

OK, so they can't leave an €8-10 million business to one child while the rest of them have to share a bit land. That's fair enough. What about dividing up the businesses between yourself and your siblings but with you getting more shares than them and in turn the would get the land to compensate for the lesser amount of shares?

dame

Since you've put in the work I think you do have more of a claim than your siblings, but they do have a claim also. That's only my opinion now and I'm no expert on inheritance or dividing up a business or anything like that.

What if you suggested to your parents that they retire whenever they're ready and give say 40% shares to you. The other 60% or so could be divided among your parents and your siblings, with the complete understanding that you are in charge and the others are sleeping partners who do nothing more than collect a share of the profits (some sort of contract would need to arranged to ensure it). Then when your parents passd on their shares could be left to you so that you'd end up as a majority share-holder. The other properties could be shared between your siblings. Maybe that would seem fair to your siblings as they'd still be receiving healthy payments from the profits, for simply having the shares sitting there. The major problem I could see would be if one or two of them decided they wanted to sell their share and release the cash. Perhaps you could have a chance to buy out one sibling here and there as time goes on though.

tritium

OP, as other posters have already advised, look at buying the business from yur parents. the banks should be happy to work out a commercial loan if it's a highly viable business and you have extensive experience. If this is a runner, talk to your father about putting in place a business plan for the eventual transition and approach the bank with him. Would expect you to ask for some kind of reduction in the fair market value of the business based on your input over the years. Good luck

LegacyUser

Op, why would your parents sell a successful business that their son is practically running? It doesnt sound like they need to financially.
You need to sit down and talk to them because there is lots of options open to you.

If they want to free up cash from the business then your dad and mum should be putting company money into pension schemes. You'd be really surprised how much they could get out of the company upon retirement. They could then live on the money or leave it to the rest of your family.

You could also offer to take out a loan on the business, if it is transfered to you upon their retirement.

Since your parents have other assets i think it is perfectly reasonable that you should inherit the business. When you talk to your parents, if their concern is about everyone getting a fair share then go and talk to a good tax accountant.

Hope it works out for you because it would be a shame if the business your father built up had to be sold.

My family were in the exact same position, the sibling that stayed and worked in the business is going to inherit it, the others will recieve other assets and investments. My father sat down with the family and explained exactly whats going to happen, there is no bitterness, quite the opposite. Nobody has an automatic entitlement, and we all just feel very lucky to be financially secure due to our fathers hard work.

antoinolachtnai

I would go and talk to the banks and VCs and figure out a way to get control of this company as quickly as possible, at a price to the satisfaction of your parents. If you have to bring in external investors as well as the lending, do so. You will end up owning a bigger proportion of the company than any other way.

It sounds fair that you should get some sort of equity share for the work you have done and are going to do but that's up to your parents.

If you wait, resentment will grow and the business will be damaged because you are no longer going to feel fully committed to it.

You could be disappointed here, if your parents don't agree with you about your contribution to the business. I don't know anything about you or your company or your business, but they could well be right. If you disagree with them regarding the value you are adding don't get too upset about it. It's just business. You still have the option of making an offer to buy it, if you can get the financial backing.

davyjose

hathor wrote:

Agiven the years of hard graft Iv put in,I KNOW ive been part of the reason the company has got to the point its at now.

Yeah, we can all say that OP. You get a wage, don't you? I'm willing to bet a good wage too. But you want a business worth 8-10 million while your siblings get nothing. I'm sorry but if I had a business and my child had your attitude (greed, with no thought for his/her siblings), I'd be disgusted.

We all work OP, but most of us don't expect to inherit the business we work in!!!

LegacyUser

davyjose wrote:

Yeah, we can all say that OP. You get a wage, don't you? I'm willing to bet a good wage too. But you want a business worth 8-10 million while your siblings get nothing. I'm sorry but if I had a business and my child had your attitude (greed, with no thought for his/her siblings), I'd be disgusted.

We all work OP, but most of us don't expect to inherit the business we work in!!!

davy...theres no way I would have expected my parents to leave nothing to my brothers and sisters...but given our families past history of getting too many people involved in a single business,I dont believe its something my parents would want to do. Wheres the sense is giving shares to my brothers and sisters who never worked there,dont know the first thing about the business,industry trends past,present and future.I always knew its what I wanted to do...I went to college in the UK to study and get qualified,and then spent a year in Europe gaining independent work experiance.


Your right though,Iam just an employee...and maybe I was just expecting too much. Iv read some good ideas from posters along the lines of buying my own stake within the company,and its something Im gonna give alot of thought to.

As far as my brothers and sisters are concerned...they are very practical,easy going people,who grew up with it being me,dad and mam running the business....and I have to say,Im pretty sure they would never have expected to recieve anything from the business,so on that front,I really never envisage problems. As I said in a previous post,my parents have quite alot of wealth in property,both here and abroad...so whereas that could be split up among them,the business could remain a family company. If they do sell,whats mostly likely to happen would be it would be swallowed up by a larger company and cease to exist.

Gordon

hathor, this thread may be better off in a business forum, would you like it moved or prefer it here? You can't post unregged in those forums though.