What is the Platinum One Destinations business opportunity?

What are the pros/cons of giving a key family employee partial ownership of one's business?

• I work at a business that was started by my father. He still has 100% ownership. I have been there 5 years. The business has been around for 35 years. My uncle has been working at the business for 12 years now. For the last 7 years, my father has been 90% retired from performing work for the business due to his health. My uncle has been leading the day to day execution of the business since then. Around 5 years ago, my uncle asked my father for part ownership in the business. This strained the relationship between them. My father said no, but they did agree to giving him a much larger salary each year to make up for the fact that he was taking care of the business. (his salary is calculated vs. the gross margin but in general you can assume his salary tripled starting in 2009) This year, my father is planning to start transferring shares to me. This was the plan all along for me from when I started working for this company. My salary is paltry compared to my uncle's even though I am acting as the owner for the day to day. As part of the share transfer, he wants to know if I wish to offer shares to my uncle for purchase at the price at which the business was valued earlier this year. I believe he's partly asking me because he thinks it might be helpful for keeping good relations inside the family. The business is very healthy and cash flow is currently good (although one can always use more right?). It's a brick and mortar company that distributes food products. Is it a good idea to give my uncle the opportunity to purchase shares of the business? Is there a recommended professional that I should heed the advice of to make this determination?

• Answer:

  This is a tricky situation because it involves family, so you're right not to ask for a definitive answer. I would ask a few questions of yourself to start making this decision: How critical is your uncle to the business? It sounds like you, your father and your uncle have a good relationship - even if your father didn't make your uncle a part owner, he did triple his salary. Was this justified (would your father have done this for a non-family member in the same role making the same request)? Would it harm the business if your uncle left?Would it help the business if your uncle left? What is your relationship like with your uncle? It's one thing to have your uncle as a highly paid employee, it's another to make him a part owner - he may have different goals than you and is likely at a different stage of his life. Will he want you to buy the shares back from him when he retires? Will he want to sell the business to retire where you want to continue growing it? Is he going to want to run the business in a different way than you are? What is your relationship like with your uncle's heirs? If your uncle dies, are you going to be able to work with his heirs? If, for example, your cousins hate your guts and are drug addicts (extreme situation, obviously) you don't want to take any chance of part of your business falling into their hands. Is not giving your uncle shares going to cause a family rift? Again, it seems like you have a good relationship with your uncle and he has a good relationship with the business. Is not giving your uncle ownership going to cause family friction you can't accept? Sometimes with family you just can't make the right "business" decision - family is family. This is a highly personal aspect. Why did your father decline to give your uncle shares when he asked originally? Ultimately, you should talk this over with your father, then with your uncle and your father. It sounds like you all have a good relationship - if you want your uncle to continue to be involved in the business you should have a conversation with him about what you decide and why and get his buy-in. Just because he's not an owner doesn't mean he can't be extremely well compensated based on performance (which it sounds like he is). Doing things this way gets rid of a lot of control/secession planning issues while still compensating him fairly - this may be why your father declined to transfer ownership.