For a Single Family Office led by its founder, succession planning is often the last thing on the founder’s mind. But failure to plan for the office’s scope and services after the founder’s demise can leave the family and the family office staff alike in an impossible situation, and put at risk the wealth that the founder worked so hard to create.
This comprehensive article provides thorough analysis and actionable recommendations addressing succession planning in single family offices.
“A Matter of Trusts” is an in-depth assessment of how to more effectively implement family business ownership succession planning through trusts. For an introduction to the subject of trusts in family business ownership, read, “How to Read a Trust.”
Created in the 1970’s by professors John Davis and Renato Tagiuri of the Harvard Business School, the Three-Circle Model is a time-tested and oft-referenced tool for understanding the relationships between the owners, business, and family in a family enterprise system.
Watch this short, informational video to help round your understanding of these critical relationships and gain insight that may change your perspective.
How do you create a Board of Directors? A Family Assembly? What about an Owners Council or Beneficiary Council? What will they do? Who will be on them? Well run forums are a significant asset when making major decisions and for aligning stakeholders across the enterprise system, but many families don’t fully utilize them. Learn how you might start to put forums to work in your family enterprise in this practical article.
When so much of the business world’s discussion space is filled with hot topics such as “unicorns,” “disruptors,” “private equity,” and “exits,” it is easy to see why family business owners may feel out of step with trends in business strategy. These trends come and go (think: matrixed organization, vertical integration, synergy, virtual corporation), but for at least some family business owners, the sense of disconnection is perpetual.
In family business governance, structures like an owners’ council are of benefit as a family and their business become more complex over time. This begs the question, however, what should the council do?
The concept of Intention offers an innovative approach to answering this question, one that is firmly rooted in the realistic view that governance structures need to be designed in the image of the owning family.
So often, I am asked, “How do I talk to my kids about…” The money? The business? Their trust? Their opportunities?
I often suggest to clients that they create ways for next-generation family members to “bob in the pool”—to participate in the day-to-day activities of managing the family’s Financial Capital from the earliest days, at a level appropriate to their age and stage.
The swimming metaphor applies throughout life. Parents have an understandable desire to shield kids from the potentially dangerous and dark side of wealth. But too much shielding is like keeping kids from water: we prevent them from learning skills that may save their lives.
A board of directors is often promoted as a critical tool for growing family businesses—and rightly so. A well-constructed board can bring new thinking and perspective, better deliberation, along with expertise and experience that the business needs to grow and achieve its vision of success.
But boards are not a magic elixir, either. when the owners fail to communicate their vision—their direction—for the future of the business, there is a real possibility that the board’s well-intentioned efforts will veer off course, destroying capital the family has worked for years to create.
Words to the wise: This article does not constitute legal advice. It is in no way a substitute for having a lawyer who works in the area of trusts and estates review your document and tell you what’s going on. What it will do is give you a basic grounding in a few key trust concepts. Just remember, a person who serves as his own lawyer has a fool for a client.
As family business consultants, we are often asked, “How do you know if a family in conflict can be helped, or if they are headed toward either litigation or stagnation?” While there is no test of absolute certainty, we have identified a predictor of how likely a family might be to manage conflict in new and constructive ways: The Family Factor.
What is the measure of success for a multi-generational family business? Who should decide which path to take? are we learning the right lessons? and what is the balance between meddling and leading?
Amelia Renkert-Thomas answers these questions and discusses why public company models are not good guides for family business owners.
You’ve read the statistics: Only 30 percent of all family-owned businesses survive into the second generation and only 12 percent will survive into the third generation. Only three percent of all family businesses operate at the fourth generation and beyond. Even if you haven’t read Roy Williams and Vic Preisser’s 2003 book, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, which gleaned these statistics from their study of 3,250 business-owning families, you’ve probably been served up the data by wealth management firms, private banks, and family business consulting operations seeking to persuade you that your family business is at great risk. “Do the right thing,” they say (invest more wisely, do your estate planning, form a family office, etc., etc.). Then, your business will continue generation after generation, and all will be well.
We here at Engaged Ownership don’t buy it.
