Mediation for the Family Business

Sandy Bailick of discusses the advantage of involving mediation in your business planning.“It’s a decision that many entrepreneurs face – whether to hold on to the company they built from the ground up or sell and potentially give up control.” This was the first paragraph of the DealBook column in The New York Times (July 13, 2012),  reporting on the death of Walter Zable, the founder of Cubic Corp., at age 97. Though publicly traded, Zable was reported to have owned 30% of Cubic’s stock. Zable’s family will inherit those shares but may have to sell a significant portion to offset estate taxes, which may lessen family control.

Cubic is a large business; revenues exceeded $1 billion dollars in 2011. The issues prompted by Zable’s passing may be familiar to considerably smaller family businesses – which are the focus of this blog.

Although a family business may be healthy, urgent issues may arise when the person owning or controlling the business passes away. Factors such as old age and ill health may have already prompted preparation of a plan of succession (who will inherit or control, or, will the business be sold in a manner minimizing tax consequences to heirs, etc.). However, it’s a fact that even younger people may die suddenly and unexpectedly, before any thought has been given to what to do with a particular enterprise in those circumstances.

The obvious answer to these concerns is good planning but this may be much easier said than done. Such planning takes time and there are numerous issues and potentially conflicting considerations involved. A plan must be durable too, able to reflect changing circumstances and allow for adjustments as necessary.

Mediation may play a helpful role in addressing these issues. While there are many competent and creative attorneys and financial advisers capable of drafting the necessary plans and documentation, all of this must rest upon clear objectives. Where an owner’s intentions are unclear, it may be more difficult for attorneys and advisers to fashion a plan that will address the interests and concerns as well as meet with the approval of all involved.

Mediation is not an alternative to the use of financial planners, accountants, lawyers, etc. But it is a potentially ideal way for family members to discuss their concerns, goals and objectives for a plan of succession. The decisions may then be conveyed to counsel and accountants so that the hard work of creating and putting plans in place may be accomplished.

Even if areas of disagreement remain, the mediation process will be an effective way to highlight these issues so that advisers may suggest appropriate alternatives.

Mediation of family business matters could be nothing more than a single, very informal session or it may include attorneys and other advisers. Provisions for confidentiality may be adopted at the inception so that if things do not work out, the items discussed and mentioned in the mediation, do not become the source of testimony, should things degenerate into a litigated dispute.

Finally, mediation may be more “surgical.” For example, even after plans are drafted, there may be a particular dispute that remains unresolved. Here mediation is aimed at a workout of the disagreement, offering a potentially economical path to resolution in lieu of a protracted negotiation through multiple lawyers, or worse, a descent into the litigious realm.


Feel free to ask any questions, to comment, or to request more information in the Comments Box below. Also, please feel free to forward this blog to anyone you know who might be interested in its topic.

Sanford (Sandy) Balick, Attorney & Mediator in New York Sandy Balick signature
Sanford E. Balick, Esq.
Founder & Principal Mediator
Consensus Point Mediation, LLC.

Phone: (646) 340-3434


Print Friendly

One Response to Mediation for the Family Business

Leave a Reply

Your email address will not be published. Required fields are marked *