Practice Areas & Industries: Fredrikson & Byron, P.A.

Practice/Industry Group Overview

Fredrikson & Byron’s Family Business Group uses a unique process to guide families in successfully transitioning and continuing their companies. We help family owners understand their goals; identify what is needed to achieve those goals; and provide practical, proven, and tailored solutions that address the values, needs, and goals of each family and their business.

"Our experience, unique process, understanding of our client’s business and desired results, and outside perspective are key to creating a successful transition plan."

Business Landscape

Family businesses are unique, blending family and business dynamics in a way not found with other companies. Mixing family and business often strengthens both the family and the business, but this strength is commonly tested when either one or more family member or the company is in transition.

Signs of transition are usually reflected in questions asked by key participants of the company. For example:

• How can I get my managers to take on more responsibility?
• How can I transition without “exiting” my business? Working at my company is the only thing I’ve done, and I’m not ready to retire.
• How can I get the cash I need and still pass my company to my children?
• How do I transfer my business to my family when some work there and others don’t, and still be fair to everyone?
• How can my children keep the business going if none of them works there?
• How do I decide which child runs the business?
• What do I do if a child is hurting the business?
• How do we make sure we don’t spoil our children?
• What will happen to the business when I die? When my spouse dies? When my parent dies?
• Should I keep or sell my (our) business?
• What do Dad and Mom really want?
• When do I get my chance at running the company?
• Can I be part of the business if I don’t work there?
• Why should my siblings get part of the business if they don’t work there?
• How do I tell Mom and Dad what I need without hurting them?
• When are my parents-in-law going to give my spouse a chance?
• Who can I talk to who knows something about this?

When these questions surface, owners can seek outside assistance to help them identify the underlying transition issues and how to adequately address these challenges.

Services Available

Fredrikson & Byron’s Family Business Group has extensive experience in helping families successfully resolve all sorts of transition challenges to continue their goal of keeping their family businesses, including the following:

• Helping entrepreneurs transition in a way that works for them (not as someone tells them it has to be)
• Keeping ownership within the family
• Passing the business to the founder’s children but also needing to get their retirement out
• Advising multiple owners who don’t want a single owner to dominate the others
• Working with businesses that have some owners who are employed in the business and other owners who are not
• Counseling younger owners wondering what they can do as they wait for their turn to run the business
• Advising non-family managers struggling with how to serve the family and the business
• Helping owners assess whether they keep or sell their business
• Helping businesses who have unexpectedly lost a key person and people don’t know what to do
• Managing the estate tax burden associated with transitioning a family business
• Providing ways to buy out family members who no longer want to be owners without crippling the business
• Dealing with the role and interests of spouses in a way that supports family unity and does not upset the transition goals for the business
• Making sure the wills and trusts for the entire family support the plan to transition the family business – everything has to work together
• Handling the varying interests that exist in today’s family environment (blended families, significantly younger spouses, adopted children, children out of wedlock, etc.)
• Keeping owners and managers separate so owners don’t interfere with management
• Establishing the type of board that meets the goals and needs of the owners
• Training boards to do what the owners want, rather than what individual directors want

Our Approach

Our family business attorneys help family owners identify their succession goals and develop and implement a transition plan to achieve these goals. Although we use a customized approach with each family business, our results are always the same—helping family owners achieve what they want for their families and businesses.

We design and manage a process that guides families and other owners and managers to do the work required to achieve the succession goals. Our experience, unique process, understanding of our client’s business and desired results, and outside perspective are key to creating a successful transition plan.

Our transition plans integrate all of the major groups within the family business: the owners, managers, board, and family. We work with clients to ensure that each of these groups knows their role and responsibilities and how it integrates with other groups. We show how to balance the interests of the owners and managers if the interests of these respective groups are not aligned.

When the family or business can benefit from specific services, we help clients make connections with other professional advisors. We work with the client’s existing professional advisors (even their attorneys) to ensure that their work is aligned with the transition plan.

Representative Clients

Fredrikson & Byron’s family business attorneys work with many different types of private companies, using a practical and effective approach. We never lose sight that we are helping clients with their livelihood, so we take our work seriously and work hard to use the law to meet the complex challenges of today’s family businesses.

Here is a sampling of the types of clients we have helped:

• Founders and entrepreneurs who have worked all their lives in their businesses and who now want to change their role but still be involved in their business
• Younger generations who want to learn how they can own and operate the family business when the founder or entrepreneur is not involved
• Family businesses owned by next generation family members, some of whom work at the company and some of whom don’t
• Family businesses where the owners and managers are different people, ranging from none of the family owners working at the company to owners working at the company but not in management
• Non-family managers whose careers are tied to the continuation of the family business
• Companies owned by first and second generations to companies owned by third, fourth, and fifth generations (all at the same time)
• Companies with one owner (the founder) who wants to pass his or her business to her children, to businesses owned by ninety owners (fourth and fifth generations) who want their business to continue into the sixth generation
• Businesses that are in their first stages of growth, with revenues in the $10M to $20M range, to mature businesses with revenues exceeding $100M
• Manufacturers, suppliers, distributors, natural resources operations, construction companies and hi-tech, international, and personal service firms
• Families that have never owned anything together before and who never thought they could or don’t know if they can
• Families with difficulties (we all can relate to that) and businesses with challenges

We have many success stories. And many of these clients are willing to help others who could use support and help in the transition of their companies. We often ask clients who have done extensive transition work to act as a resource to clients who are early in the process of addressing these issues.

Industry Involvement

We are actively involved in the family business community and networks of professionals who support family business growth, including:

• Family Firm Institute (FFI), the international trade organization for family business professionals
• Attorneys for Family-Held Enterprises (AFHE), the only national organization for attorneys that is dedicated to family businesses
• American Council of Estate and Trust Counsel (ACTEC)
• The South Dakota Family Business Association
• The Family Business Alliance, a multi-disciplinary group of professionals that provides comprehensive, customized consulting services to families in business together
• The Board School, the country’s first school for owners, directors, and managers of family businesses
• The Balance Point: New ways business owners can use boards, 2008, Famille Press: A must-read book for entrepreneurs wishing to transition their roles within family businesses while remaining involved and for family businesses owned by multiple owners

Practical Takeaway

Family businesses are unique. Their continued success depends on how well the family owners can navigate the various transition challenges within the family and business brought about by changing circumstances. These challenges are best addressed with the help of an outside resource that has helped many similar businesses effectively address these challenges.