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ESOPs offer liquidity solutions

Employee Stock Ownership Plans can create liquidity to resolve potentially contentious family business issues related to estate planning, cash for inactive family owners and funding for the business.

By Richard Houlihan

Most later-generation family businesses will face a liquidity crisis at some point in their life cycle—all too often when it is least expected, and when the family can least afford to be divided by a contentious issue.

A company, for example, may require reinvestment of profits to meet business needs while, at the same time, family owners inactive in the business may need dividends to help support their lifestyles. There also may be liquidity issues related to the death of a senior business leader—cash may be needed to fund taxes, estate administration fees and other expenses related to the senior leader’s … Read more

A few bad eggs can hurt all family firms

A nationwide recall of eggs connected to widespread salmonella poisoning caused millions of wary Americans to alter their breakfast menus this summer, as federal investigators scrambled to find the source of the outbreak.

An Iowa family enterprise has been linked to the egg recall. The Des Moines Register reported that the giant DeCoster family agribusiness enterprise, which owns Wright County Egg, recalled millions of eggs it had shipped to wholesalers, distribution centers and food service companies in eight states. A New York Times article, citing a Food and Drug Administration official, said salmonella was found in feed given to pullets raised by a DeCoster … Read more