Corporate Finance in Atlantic Canada

Commentary on corporate finance issues for small- & mid-market private companies in Atlantic Canada

Family Business Paradox – Do you want fair or equal?

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http://www.bdo.ca/en/Library/Services/business-transition/pages/Family-Business-Paradox.aspx

Check out this BDO article on some of the challenges particularly unique to family businesses.  I like this paragraph on “fair versus equal” — some folks actually think this is how the “pot” should be divided!

If a father loves his children equally should he not treat them exactly the same in all matters? Does that mean everyone who works in the business is paid the same or that all children receive equal shares in the family business? If fair means equal then all family members working in the family business would be paid equally regardless of their skills and market value. If fair means equal then each child would inherit the same amount of wealth or shares of the business in their parents’ wills.

If fair is not necessarily equal then children who are given or left shares of the family business could end up receiving a much higher proportion of the family wealth than their siblings. If fair is not equal some children would receive a higher payout based on their employment value rather than on their gender or birth order.

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Written by Dan Jennings

May 1, 2015 at 5:33 pm

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