Network: August 1992
Eighteen months ago Kathy Gyurkey's son joined her real-estate-management company. Now she and her partner want to give him an equity share (Here Comes the Son, [Article link], July 1992).* * *
Distinguish family interests from business interests when defining your son's role. If he weren't your son, would you consider him for partnership with less than two years' employment? You and your partner should establish rules for attaining partnership, including educational and experiential requirements, and apply them to your son and any other children who might join the business. Then consider a phantom-stock or performance-share plan for your son. You would value shares annually and, with your son, set personal and business goals. As he meets goals, you'd grant him shares. After a few years he could cash in the shares to buy an interest in the business -- you credit to him a portion of the company's future growth.
Cohn Financial Group
Phoenix* * *
In May 1992, we heard from a reader who was never paid for consulting work done for a bank that subsequently closed. The reader won a small-claims decision but couldn't locate the bank owners. A recent call to the old phone number was answered with the old bank's name. "How do I determine if these are the same people who stiffed me for $3,000, and how do I get paid?" the reader asked (Return of the Living Deadbeat).* * *
Call the secretary of state's office in your state. It can identify the principals of the corporation. If the same people are now operating the new business, get a writ of execution from the court and have the sheriff serve it on them. If they do not respond, the sheriff can attach assets or arrest them. This worked for me.
Manchester, N.H.* * *
Raymond DaRin's two-year-old pallet and packaging company has outgrown its facilities, but local banks won't lend him money to expand, since he can't offer a house as collateral (Banks Balk at Business's Borrowing, May 1992).* * *
We've had a similar problem for the past five years. The solution? We purchased a building that a local bank had foreclosed on. We paid about 30% less than the appraised value, and a 20% down payment obviated the need for additional collateral. We expanded our facilities and used the instant equity in the building to secure a line of credit.
Peter J. Durant