Question

A founder of a family business is contemplating turning 20 percent of the business over to each of his five children. What would the most active child in the business (the leadership successor) then become?

A. a subcontracted employee with equal responsibility to relatives on the outside.

B. an equal share employee with more responsibilities than relatives on the outside.

C. a business owner that receives less return for work performed than relatives on the outside.

D. a minority stockholder at the mercy of relatives on the outside.

Answer 1

The leadership successor of a family business who receives 20% ownership would become an equal share employee with more responsibilities than less involved relatives.

Step-by-step explanation:

The founder of a family business who is contemplating turning over 20 percent of the business to each of his five children is faced with a decision that will impact the structure and management of the business. If the most active child in the business is designated as the leadership successor, upon receiving 20% ownership, this child would fit closest with option B: an equal share employee with more responsibilities than relatives on the outside. This is because while this child would be one of the owners and have an equal stake in the business, as the most active or potentially leading figure in the business operations, they would inherently take on more day-to-day responsibilities and leadership roles compared to their siblings who may be less involved.