A Family Affair

Now more than ever, family-owned businesses must craft solid succession plans to develop enterprises that grow and prosper

“I work on a trading floor. It’s a very gruff environment, and my wife doesn’t respond to that in our business. I realized that if my job was to stimulate my CEO, then I needed to change my style,” he says. Avery recommends Brian Tracy’s audiobook The Psychology of Achievement (Simon & Schuster Audio, $17) and says he even enrolled in seminars on personnel management. “It’s worked,” says Avery, and he considers this to be his biggest lesson learned in working with his wife. Trina attributes enhanced productivity and a successful joint venture to Avery’s change in style.

With a change in style came a change in thinking, particularly when it involved making preparations for the future and crafting a succession plan. But initially, Avery wasn’t a willing participant. “It’s a very difficult thing to do. I canceled the first couple of meetings. You’re talking about giving up your life’s work to someone else. I thought, ‘Who do I love? Who are my beneficiaries? Who’s going to run this?'”

In the event something happens to both of them, the Byrds have asked one of Avery’s long-time colleagues in the financial industry to serve as their executor. “He’s a business associate and he’s my friend. And he’s a person who will follow my orders objectively and in an unemotional way,” says Avery, whose son, Avery Jr., a Morehouse College junior, has expressed interest in running the company one day.

They are also reviewing the possibility of transferring some ownership to a few key junior managers as long-term incentive compensation. Such measures are consistent with executive incentive compensation plans offered by many public companies to help retain key employees, says David T. La Velle, a certified financial manager at the Merrill Lynch U.S. Private Client Group in Los Angeles.

The Byrds also have a key man life insurance policy that would pay twice Trina’s salary (which is more than $100,000 annually) in the event she dies and twice Avery’s salary should he pass away. This twice-the-salary formula accounts for expenses Bradford & Byrd Associates might incur in attracting qualified people to fill either position. The policy also allows the company to continue operating until succession plans are implemented and estate tax payments are covered.

La Velle suggests business owners also secure a trust company for estate matters. “A trustee must perform a variety of specialized functions, including the maintenance of records, preparation and filing of taxes, and dealing with the needs of the beneficiaries,” he says. “Serving as trustee can be burdensome if the chosen individual is unprepared for the task.” The Byrd’s attorney, Corey Kupfer of New York City — based Kupfer, Rosen, serves as their trustee.

Paul C. Hudson, 54, president and CEO of Los Angeles-based Broadway Federal Bank (No. 11 on the BE 100 BANKS list with $179 million in assets), is following in the footsteps of his father, Elbert Hudson, 81, and his late grandfather, Dr. H. Claude Hudson, a former dentist who saw the need for an institution that would help

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