Dividing the Family Business

One of the most difficult decisions facing the owner of a family business is how to divide a family business when 1 or more children work in the business and 1 or more children are not involved in the business. Although the initial inclination often is to divide the business equally between the children, a careful analysis of the situation usually results in a conclusion that equally is not fair with respect to differently situated children. A better result is achieved when the business owner attempts to treat each child fairly rather than equally. Many family businesses have failed due to the problems caused by dividing the family business equally between the children who work in the business and the children who do not work in the business. Good planning can help solve this problem as well as preserve harmony in the family. Many tools exist to help solve this problem and because each situation is different no one tool is the magic solution. A later blog will discuss some of the available tools for business succession planning.