Services for Family-Owned Business and Their Owners

Family businesses and the families that own them face special challenges.  Shared histories, complex relationships and emotions intersect with the profit motive of the business and profoundly affect the way legal and strategic decisions are perceived and acted upon.  Karlen, Stolzar & Reimann, LLP, is well positioned to meet these needs.

Andrew N. Karlen, Esq., whose practice focuses on the legal and business side of the family business and how interpersonal relationships affect them, and Tracy Christen Reimann, Esq., who practices in the estate planning area, team to meet the diverse legal needs of family owned businesses.

We work closely with owners to develop the right strategy for transferring ownership to the next generation. Tools include lifetime gifting programs that take advantage of available discounts for minority interest and lack of marketability, corporate recapitalizations to facilitate the discounts and transfers, bequests, sales of ownership interests, stockholders agreements, buy-sell agreements, operating agreements, grantor retained annuity trusts and family limited partnerships.

In addition, we help business families meet the unexpected challenges of success.  First generation businesses tend to be owned and managed by a small group of people with governance that exists in the corporate by-laws or limited liability company operating agreement rather than in day-today reality.

Although the first generation owners may own different percentages of the company, their interests will generally have identical voting rights and other attributes.  In the second and succeeding generations, however, the ownership group expands and constituencies develop -- active owners who want to be fairly compensated and to reinvest profits in the business as opposed to passive owners who may depend on distribution of profits.  At this stage, it may be appropriate to create classes of ownership with different voting, distribution or other rights.

The informal management and governance structures that used to work so well can be made obsolete by factors such as growth, technology and the global economy.  We counsel clients in keeping pace with these needs. We've help plan strategies such as establishing criteria for family members to enter or be promoted within the business (e.g., college or graduate degree in a relevant field or obtaining relevant work experience before coming into the family business), and creating governance structures such as boards of directors or a board of advisors.

When appropriate, Mr. Karlen and Ms. Reimann collaborate with other professionals to provide the necessary expertise for family businesses. Our attorneys have teamed with family business consultants, business consultants, certified public accountants, financial planners and others to help family businesses with the challenges they face.

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Andy Karlen, working with our other professional advisors, structured the transfer of our electrical contracting company to me from my father, the founder and truly a self-made man. We were immediately at ease with Andy because he listened without attempting to showcase his expertise. He understood that the business succession and estate plans my parents would ultimately embrace would have to be fair to my three sisters in addition to transferring the business to me. At one of our meetings, my father told Andy about his life, how he started and built the business and the values upon which my mother and he raised my sisters and me. I can’t say whether my father or Andy enjoyed that conversation more. I can say, however, that the wise decisions my parents made were facilitated by Andy’s counsel, particularly at the critical moments when legal, estate and gift tax strategies and their comfort levels appeared out of synch. I would highly recommend him to anyone in need of corporate legal counsel, especially that in the area of estate and succession planning.   

Richard Sajiun, President
Saijiun Electric Inc.