Business Stock in Trusts

As founder, if you decide not to sell your business but hold it and continued to receive cash flow sooner or later the issue of what to do with the business, who to transfer it to and why, must be dealt with.

Founder’s who reach this point often find their transferring their stock in trust, they hope, to their adult children.  Let them deal with it

Its not that simple.

  • The majority of individual and corporate trustees are not schooled in private assets, like your business.
  • So how do you find a trustee that will abide by you, as Benefactor, and  your intent for this asset?
  • What if industry or market conditions change and affect returns on your business?  Who will advise the trustee about the health and sustainability of the business?
  • What if management changes or transitions occur that effect the performance of the business?   Is the trustee equipped to handle these?
  • What if returns on the business sag or decline over time?  Who will counsel the trustee or financial adviser who may want to sell?

These things happen.  Trustee duties and roles are not well understood.  So should this asset be held in trust or is there another way, or are you missing knowledge or skill sets?  This is in part a legal question but there are alternatives.

Our role in this, is the health and sustainability of returns from the business over time.   For trustees and trust companies or partnerships and managing director of them, we can provide the details and data points about the market, capital, equity value and risks in the business.  When we manage business risk we identify, measure, manage or mitigate tangible and intangible risks which impact the bottom line value of the business.   This will enable improved decisions about the business and sustainability of growth of returns AND value over time.