“In family businesses, the first generation creates, the second spends, and the third destroys.” - Anonymous
Case Study: Goodwin Sporting Goods
I – STATEMENT OF THE PROBLEM
Given the family situation and the President’s foreseeable retirement, should the family business, Goodwin Sporting Goods, be sold?
How can the second generation handle their retirement?
(In both situations where the business is sold and when it is not)
II – OBJECTIVES
To decide whether the family business be sold or not.
To have a plan for Jim Jr.’s and Pam’s (second generation) retirement.
III – AREAS OF CONSIDERATION
No succession plan was ever established.
At Jim Jr.’s entry into the business, a direct sales model was implemented upon his recommendation to better the financial position of the company. AC3
Jim Jr. fully acquired the business from Paul, his uncle, after his father’s death. AC4
The company remained a regional leader throughout the years. However no additional investments were made to further the company’s growth, despite the third generation’s expressed desire to. AC5
The business was well; however, the family had issues with their personal cash flow. It can be assumed that despite their wealth, the family had monetary concerns and were not able to address them. AC6
Jim Jr and Pam considers selling the family business.
There are no mentions of Jim Jr.’s approval or his confidence in having Peter fully manage the business. The Goodwin Family Genogram also suggests that Jim Jr and Peter are in conflict. AC8
Jim Jr.’s successors are Peter, Mary and Fred. Fred suffers from illness. Mary is married and with family. Peter is the suitable successor to the business. AC9
Peter has no other working experience. The family business is the only place he has ever worked in. AC10
Jim Jr. and Pam had no estate plan.
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