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Category: Business:Entrepreneur
Keywords: Younger Workers, middle managers , next generation
Summary: Selected middle managers can earn shares that vest, or become theirs, over a period of years. The company can deduct the value of those shares and realize a tax savings as it gives this "next generation" of owners a stake in the success it helps bui

First, I would ensure the viability of the venture should any of the principals leave. Kirk Borland doesn't view that possibility as likely. Yet since all five partners are in their late 40s and early 50s, burnout remains a painful fact of life in their industry, and health issues could always arise.

A buy-sell agreement would guarantee that, if any owner died, became disabled or retired, the others or their corporation would buy him out at a predetermined price or under an agreed-upon formula. The departing partner or his family would be paid fair value for his shares, and those who run the company wouldn't see it die with one of its founders.

Next, I would start sharing the wealth with young, hungry employees who will help CCF&C grow. Selected middle managers can earn shares that vest, or become theirs, over a period of years. The company can deduct the value of those shares and realize a tax savings as it gives this "next generation" of owners a stake in the success it helps build.

Key employees will know that CCF&C is their company. They'll devote their energy to it with the same enthusiasm the five shareholders demonstrate every day. And, in a highly competitive environment, CCF&C will also be able to offer equity ownership to its new talent.

What's more, the founding owners will have created an exit strategy. Once the younger managers sign on to the buy-sell agreement, they will become the natural market for corporate shares.

The loyalty of CCF&C's key employees will be guaranteed by economic self-interest; fair, incentive-based employment pacts; and the buy-sell agreement. Over time, the firm can grow into an "institution" with the stature to position itself for challenges ahead.

mlane@marcjlane.com
Author's URL: http://www.marcjlane.com
Marc Lane is a business and tax attorney, a Master Registered Financial Planner, a Registered Financial Consultant, and a Certified Investment Specialist. Marc is the author of 30 books on business organization, taxation, and personal finance. His newest book, "Advising Entrepreneurs: Dynamic Strategies for Financial Growth" draws from his experience working with those who have successfully built their businesses.

Marc is an Adjunct Professor of Law at Northwestern University and an Adjunct Professor of Business at the University of Illinois.

His practice areas include Individual Taxation, Corporate Tax Planning, Business Tax Planning, Estate Planning, Investments, Retirement Planning,Elder Law, International Trade, Business Law, and Wills, Trusts and Estates. Additional articles, case studies, and a free email newsletter are available at www.marcjlane.com.