Archives: Governance & Business Operations

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Thought Leader Forum: Governance and Compensation

We are pleased to share with you a link to a recent article from the Puget Sound Business Journal featuring DWT partner Bill Weigand. At a recent Northwest Family Business Advisors meeting, Bill and fellow family business advisors Dan Gaffney (Moss Adams LLP), Christian Schiller (Cascadia Capital), Richard Simmonds (Pacific Family Business Institute)… Continue Reading

Family Employee Tax Policies

Hiring and employing family members is common in the realm of family businesses. An important thing to remember is that most family employees are treated in the same manner as any other employee for federal tax purposes, meaning that their compensation generally is subject to federal income tax withholding and FICA (i.e., social security and Medicare) an… Continue Reading

Family Business Owners, Gift Away! – No “Clawback” Issue!

When Congress enacted tax reform in December 2017, federal gift and estate tax “basic exclusion amount” (often referred to as the “gift and estate tax exemption”) increased to $10 million per person (from $5 million), indexed for inflation ($11,180,000 in 2018 and $11,400,000 in 2019). Absent further legislation, this portion of tax reform sun… Continue Reading

The Venn Diagram That Revolutionized Theories on Family Businesses Design

The three-circle family business model was introduced in 1978 by Renato Tagiuri and John Davis at Harvard Business School. The model represents three categories of individuals within a family business and the seven interest groups that result from all the combinations of these three. The diagram is a visual aid for representing the family business, and o… Continue Reading

Enhancing the Family Business Through the Use of Special Funds

Just as a family strives to provide funding for opportunities, a family business should consider establishing funds as reserves for particular purposes. According to Ramez A. Baasiri, author of Interrupted Entrepreneurship, these funds will “allow you to cultivate the next generation so they can handle a broad range of interruptions in entrepreneu… Continue Reading

How a Family Council Re-engaged Owners & Benefited Management

What is a Family Council and why would owners of a family business find the effort and time to form, organize and operate one worthwhile? To explain how the Family Council can operate and why it could be beneficial, this short article presents an example from a recent engagement with a client (identities changed to protect confidentiality).

First of all, a Fa… Continue Reading

Philanthropy and your Family Business

More and more family owned businesses, from the largest to the smallest, are engaging in philanthropy. Many family businesses use philanthropy as a way to develop and commit to fundamental family values for current and future generations; publicly express the values of the family business, support the community, and benefit from the attendant reputati… Continue Reading

Donate Publicly Traded Stock to Charity Instead of Cash

Computer key showing the word DONATE

Due to the general success of the stock market in recent times, many people are currently carrying appreciated stock as part of their balance sheet. Individuals who are charitably inclined and looking to make donations to a tax-exempt organization should consider using this appreciated stock from their portfolios instead of cash, as the tax savings can b… Continue Reading

Governance 101

The governance system for a family-owned business provides the structure through which the objectives of the owners and the company are set and the means for monitoring performance against them is established. This system balances the interrelationships among the family, the owners of the company, the company’s board of directors, and its managemen… Continue Reading

To Sell or Not to Sell, That Is the Question

money for startup, start capital for business concept

This market offers family businesses a multitude of alternatives to selling your company.

You are a family business owner. You continue to see the stock market appreciate, and you read about M&A activity and valuations being at a cyclical high. You likely have a number of friends who have sold their business, and hear from them about the available finan… Continue Reading

Every CEO’s Challenge and Obligation: Embracing Innovation as a Requirement of Leadership

In a brief piece for Strategy+Business titled “Business Leaders as Catalysts for Change,” Bob Woods recently interviewed George Oliver, a man with leadership experience as a senior executive at Johnson Controls, Tyco, and GE. Mr. Oliver talked generally about the changing role of the CEO in modern companies, but particularly highlighted the need f… Continue Reading

Changes to Partnership Audit Rules: What You Need to Know

While many of us were preoccupied with the sweeping “Tax Cuts and Jobs Act” passed into law in December 2017, a less publicized change in tax law went into effect on January 1, 2018. For those family-owned business that operate as limited liability companies or partnerships, this is important news for you. The IRS is substantially changing the rules on a… Continue Reading

Protecting Your Family Business Name and Brand Internationally

The trademark laws of the United States provide businesses with significant advantages in protecting their brands, even without perfecting those rights with the state or federal governments. This is because the United States trademark law confers trademark rights based on use in commerce, meaning in many situations unregistered rights can be used as e… Continue Reading

Three Lessons Gleaned From the Wright Sisters for Strong Family Owned Businesses

Family businesses are fraught with challenges, but those challenges need not overshadow the benefits of maintaining a strong and successful family business. According to the Wright sisters, owners of an event production, design, and management firm in Los Angeles, there are a few important tips to consider when starting a family business.

First and for… Continue Reading

Four Reasons for Creating a Thoughtful Shareholders Agreement

Meeting of shareholders of company illustration

A thoughtful shareholders’ agreement can be one of the most valuable tools a family business has. It can serve several purposes. A few of the easy ones are:

Restrictions on Transfer. A shareholders’ agreement—or similar document—can place appropriate restrictions on transferring shares, particularly transfers outside of the family. It can d… Continue Reading

Succession Planning – Start Early and Revisit Regularly

Man placing adhesive notes onto window

Ross Henry, a client advisor at Laird Norton Wealth Management, recently published an excellent article entitled “Succession Planning is a Process, Not a Project.”*

While noting how critical succession planning is to a family and its business, and how easy it is to put the process off, Ross identified the three main components of succession planning… Continue Reading