|
 |
 |
| Family Values Can Cause Disagreements By Roger J. Warrum |
| As the presidential politics heat up, I think we are going to hear more about family values.
Have you ever thought about the value of your family business? There are many ways to arrive at the correct
value of your business. There is the book value, gross sales value, net income value, good will value and
various other formulas. I would like to suggest another method of valuation that I will refer to as the "Family Value. "This family value is the value that various members of the family place on the business. The universal agreement between family members on this value is very important in keeping family harmony. This is because almost always each family member will have a different number in mind as the monetary value of the family business. These differences can be devastating to the family and it's future well-being. A few weeks ago I was facilitating a family meeting. This meeting was comprised of parents, adult children and their spouses. They had decided that in the event of the death of the parents, the stock would be divided equally among the four children. If one of these children died their share would be repurchased by the corporation. I asked the family members to write down (without looking at anyone else's paper) what they felt was the present value of the company. The highest estimate among the family was $8.2 million and the lowest estimate was $2.1 million. Let's think about the potential impact of this discovery. You happen to be the wife of the guy who has been telling his wife that this is an $8 million company. Your husband passes away and your brother-in-law brings you a check for your 25% of the $2 million company. The widow asks, "What is this $500, 00? A down payment? My husband told me that this company was worth $8 million. So 25% of that would be $2 million, right?" |
| Next Page |