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Success F inan ce EMPIRE BUILDING “Family businesses account for a staggering 50% of the GDP in the U.S., yet only 30% of family businesses will survive into the 2nd Generation and as little as 12% are still viable into the 3rd Generation,” reports the U.S. Small Business Association. One of the most important aspects of business succession is working out the financial pitfalls following the death of a business owner. A Buy-Sell Agreement is a contract between the business partners, which will ensure a smooth transition of ownership and protect the family’s financial future. Purchasing life insurance is the most effective option for funding a Buy-Sell Agreement because it provides immediate liquidity for the heirs and beneficiaries. It will prevent the many complications that can arise between the family members, spouse and co-owners in the event of an unexpected death. The agreement will also prevent dilution of corporate ownership by not having to liquidate assets or use cashflow to provide for the surviving heirs. There are different types of Buy-Sell Agreements such as the Cross Purchase Plan, Entity Plan and Stock Redemption Plan. Premium Finance Group can help you put the proper plan in place. Because we are a family company, we understand the dynamics and issues that come about when working with family. ABOUT THE AUTHOR Manuel Alejandro Vidal is VP of Premium Finance Group, specializing in product design; 255 Alhambra Circle, Ste. 1200, Coral Gables; 305.441.1410; PremiumFinanceGroup.com. › 36 BIG BUSINESS The words “family business” don’t necessarily mean a mom-and-pop shop, but still it’s amazing how big some get. Yes, Wal-Mart and Ford are proof of that, but did you know about the following establishments? TEX T BY STACY W YNN CARGILL, INC. Owned by the Cargill and McMillan families, Cargill started out in 1865 as a grain storage facility and grew into a global powerhouse, providing food, agriculture, financial and industrial products and services, with over 143,000 employees in 67 countries. Their annual revenues are over $100 billion. MARS, INC. Owned by the family of the same name, Mars is much more than M&Ms. They are leaders in the fields of petcare, food and drinks, as well as producing Wrigley’s gum and the a variety of chocolate brands including Snickers, Dove and Bounty. Their annual revenues are over $30 billion. KOCH INDUSTRIES The Koch family got their start in the ‘40s by capitalizing on converting oil into gasoline. The company has since expanded into pollution control equipment, minerals, fertilizers, fibers/ polymers, wood/paper, electronics components and even ranching. Their annual sales are more than $115 billion.