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Compass F inan ce
“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;
40 SUCCESS STORIES
Statistics don’t tell the whole story. While most businesses
will not stand the test of multiple generations, there are
those that defy the odds to build dynasties that inspire.
Here are a few you should know about.
TEX T BY STACY W YNN
Unlike other court Jews in the Free City
of Frankfurt in the 18th Century, Banker
Mayer Amschel Rothschild managed to
bequeath his accumulated wealth to his
5 sons. They and their descendants have
become global financial powerhouses as
well as making award-winning namesake wine.
Every family should get a Forbes headline
like this: “175 Years Later, The Mellons
Have Never Been Richer.” Matthew Taylor
Mellon II thinks outside the box, as his
Mellon taught his heirs to do, putting
millions in fashion labels and other risky
ventures. THE DU PONTS
Pierre Samuel Du Pont and his sons
came to America in 1800 and opened
the original Du Pont company, which
manufactured gunpowder. Today Du
Pont’s many companies employ 10% of
the population of Delaware. The fortune
was reportedly kept in the family by
arranged marriages of cousins.