A founder of a family business is contemplating turning the business over to his five children. One possibility, the founder believes, is to divide ownership equally among the children. This would
A) be impossible.
B) be inherently unfair to the children.
C) potentially hinder the future functioning of the business.
D) require an S corporation.

Question

Quizplus · Accepted Answer

Dividing ownership equally among the children may potentially hinder the future functioning of the business as decision-making could become more difficult with multiple owners having equal shares. It may lead to disagreements that are difficult to resolve, and it may be challenging to elect a leader who could guide the company's strategic direction. Therefore, it is important to consider other options, such as assigning different responsibilities to different children or creating a buy-sell agreement to handle future ownership changes.

A Founder of a Family Business Is Contemplating Turning the Business