Page 37 - MetalForming May 2010

stockholders (I nicknamed them the “Big Ten”) each owning 10 percent of Good Co. All are children of four broth- ers who started the business years ago.
The Big Ten are all in their 50s, healthy and each has one or more of their own kids.
Here’s the current scorecard con- cerning whether any of the Big Ten’s kids might ultimately join Good Co.:
1) Three of the Big Ten already have one or more of their kids in the business. 2) Three know for sure that none of
their kids will work for Good Co.
3) It’s a we-don’t-know-for-sure issue
for the remaining four.
What do they do about a succession
plan for Good Co.? Everybody, includ- ing the many professional advisors the Big Ten have consulted, is stumped. The problem is the same or similar when you have multiple shareholders.
Following is the succession plan that we create when there are multiple share- holders (using Good Co. as an example):
1) Each shareholders is treated as owning 100 percent of his 10 percent of the company stock. Each shareholder is given the freedom to deal with the stock he owns, provided it does not interfere with the operation of the company or the other shareholders.
For example, Sam (the caller) has a son (Tom) working for Good Co. Sam will continue to work for Good Co. He can sell (probably using an IDT), gift or leave his stock to Tom when he dies, or some combination. The point is that Sam should not be forced by the Good Co. buy/sell agreement to sell his stock to the company or his fellow stock- holders when he retires or dies.
2) Those shareholders who current- ly have no children working at Good Co.
in partnership with METALFORM tradeshows
would be a party to a buy/sell agree- ment, which is insurance funded. Each time one of the Big Ten dies, the policy death benefit would be used to buy the deceased’s stock.
3) What happens when a No. 2 shareholder (no kids in business) becomes a No. 1 shareholder (now has a kid(s) join the Good Co. workforce)? The new No. 1 shareholder is no longer subject to the terms of the buy/sell agreement, and (if he wants to) can buy his insurance policy from the com- pany for its cash surrender value.
Remember, it would take a large book to cover every possible succes- sion situation, but what is interesting, in practice, the above information (about the two callers) will solve about 98 per- cent of the succession problems I have seen over the past 40 years. Still have a question, call Irv at 847/674-5295. MF
PRESSROOM TECHNOLOGY SHOW ON THE WEB—NEW products at
MetalFormingMagazine.com
Equipment suppliers:
Interested in advertising in this unique offering?
Contact Kathy DeLollis, MetalForming publisher: 216/901-8800; kdelollis@pma.org
New Pavilions in 2010
The very successful Pressroom Technology Show on the Web, launched by MetalForming magazine in 2007, continues to grow.
The online new-product showcase, presented in partnership with METALFORM tradeshows, boasts three new pavilions for 2009—Materials and Coatings, Welding/Assembly, and Fabrication, and two new pavilions in 2010—Sensing and Rollforming.
Stay tuned and visit the online tradeshow often, as we’ll also be adding new exhibits regularly from equipment suppliers.
MetalForming magazine’s Pressroom Technology Show on the Web is the only online location where you can check out all the latest and greatest new products and technology from companies serving the metalforming industry.
www.metalformingmagazine.com/show
www.metalformingmagazine.com
METALFORMING / MAY 2010 35