Our guest on Thursday, June 24 is Kirk McMillan, former President of family-owned Twelve Baskets. Under his leadership, the company achieved exponential revenue growth and +900% increase in customers.

Kirk will discuss the role establishing a clear vision, strategic creativity and management development based on integrity played in the success of the company during his tenure. But the story doesn’t end there. Kirk left Twelve Baskets after 13 successful years and is currently a Doctoral student at Kennesaw State. He will share the process that led to that path and will discuss the topic of his research-strategy and strategic thinking.

You will come away with valuable insights about running, growing and leaving a successful family owned business and will here how a clear vision combined with a well defined and executed strategy can transform your family business as well.

Our guest:

Kirk McMillan

As second generation President of Twelve Baskets, Inc. for 13 years, Kirk built his family business, based in Atlanta, GA, into one of the leading food re-distribution organizations in the southeastern United States. After a two-year succession plan, Kirk turned over the family business to his brother. Currently, Kirk is enrolled in the doctoral program at Kennesaw State University, researching family business strategy.

A lifelong resident of Atlanta, Kirk resides in Smyrna, GA with his wife of 16 years, Kristi, who is the Director of the Cox Family Enterprise Center. Kirk is a graduate of The Citadel in Charleston, SC and received his MBA from Kennesaw University. He is a member of The Academy of Management, Greenleaf Center for Servant Leadership, Family Enterprise Research Association, Technology Association of Georgia and the Family Firm Institute.

Kirk McMillan, former President, Twelve Baskets    email: mcmillan.kirk@gmail.com

Sunset Family Business Radio

Recap: The Emotional Side of Succession and Estate Planning

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On June 17, 2010, Family Business Radio’s hosts Meredith Moore and Pat Romboletti welcomed James Robinson, Partner at Schiff Hardin LLP and Stephanie Brun de Pontet, Ph.D. an associate at The Family Business Consulting Group, Inc., to discuss estate planning—its technical and emotional aspects.

Estate planning is about so much more than business and money and inheritance. It is about the legacy you want to leave—for the next generation and their children and all the children to come. Jim believes that if you keep the legacy concept and your invaluable family relationships uppermost in your mind, it really keeps the whole estate planning process on track and in alignment.

That being said, conflict avoidance is a predominant aspect of most family businesses, according to Stephanie. If they fear a conflict, the family will avoid the topic, such as succession planning. In his work, Jim sees two major manifestations of conflict avoidance:

• A reluctance to engage in the estate planning process or planning for succession at all.
• Once the estate/succession planning conversation is started, a reluctance to involve the adult children in the discussions.

Stephanie noted that in the long run, however, that avoidance only compounds problems. For example, a founder may pass away with unsigned succession documents on her desk. Jim said, “I can draft the best documents in the world, but if they’re not signed, they are worthless. We work hard to avoid this circumstance, because it’s a hard one to fix when it’s too late.”

In grappling with family business owners who try to avoid any type of planning, Stephanie referenced a common perception she sees among seniors—“Once I’m gone, whatever happens will happen. It won’t be my problem.” However, the cost of this attitude is huge, especially the emotional cost which seems to hit heirs the hardest. She has seen family relationships disappear as a result.

Stephanie urged people to understand that succession is a process, not an event. It needs to be as transparent as possible. A 5-, 10-, 15-year time horizon is optimal. And it can’t wait until the last minute.

You can begin the process by putting together a competent, trusted team—all family members/stakeholders, financial advisors, family business specialists, estate attorneys, and CPAs. Jim added, “The choice of team members needs to be client-driven since every family business is unique. No single trusted advisor has a handle on the full picture, which is why you need a team.” Also it is critical to include all the stakeholders in the process so that they are part of the decision-making. It helps avoid anyone feeling like the final solutions and their consequences were imposed upon them.

In your estate planning discussions, remember to consider scenarios regarding disability. In Jim’s practice, this issue is rarely addressed in the documents he reviews. If it should happen, you have to go to court and have a guardian appointed for the incompetent business owner who still has legal control of the business. To avoid this unfortunate circumstance, address disability in the operation agreement. “Be careful about the definition used to describe “disability,” Jim urged. “If you have a disability policy, use its definition.”

Regarding equity and its equalization—sometimes it is not practical to divide the estate equally among your heirs, especially when many of the assets are illiquid. One strategy Stephanie employs is to encourage the founder/patriarch to “take a raise”; that is, to take money out of the business so that they can diversify—and liquefy. It helps with the choices regarding estate planning and also with the emotional task of letting go.

From his years in law school, Jim shared the fact that everyone has a will—whether you have a document or not. Because if you don’t have your wishes expressed in a formal will of your own making, then the state of Georgia (or wherever you live) will be happy to supply a will for you. Although it may not even come close to being something you would want to happen. Jim: “It is rarely workable or satisfactory to anyone.”

This penetrating discussion is available as a download from our website. You’ll be impressed with the breadth and depth of Jim and Stephanie’s knowledge on this hugely important, highly emotional topic.

James R. Robinson, Partner, Schiff Hardin LLP, Atlanta, GA – 404-437-7038  Email: jrobinson@SchiffHardin

Stephanie Brun de Pontet, Ph.D.  email: Brundepontet@efamilybusiness.com  678-773-1675 The Family Business Consulting Group, Inc. · 1220-B Kennestone Circle Marietta GA  30066 Phone 888-421-0110 · Fax 770-425-1776