Scenario
An investor wants a stake in the family company
The money is welcome, but the terms will bind the family for years.
- The situation
- A family company needs funding to grow, and an outside investor has sent draft terms. Family members hold their shares in different ways, and nobody has looked at what the financing does to tax or to the family's say in the company.
- What we would do
- Before anything is signed, we bring the family's tax advisers together and review how the shares are held, with any trust handled by licensed trustees. Structuring and tax preparation are done before the family commits.
- Where it leaves the family
- The family signs knowing what the financing changes for its tax, its shares and its say.