We understand that our clients have worked hard, and continue to do so, to generate family wealth through their businesses. Very often, preservation and continuation of these businesses depends on how the family comes together to make it happen.
We work closely with our client families to create structures and manage them for this purpose. The main objective is to help family businesses prosper across generations.
Family governance is a process or structure to educate and facilitate communication between family members. It also provides a forum for constructive discussion, problem solving and decisions about the family as it relates to the business, as well as, how the business relates to the family.
Family businesses operate with three overlapping spheres - family, ownership and business. For a family business to function effectively over time, each of these spheres must understand how to interact with and support the other two. In addition, people within each sphere should appreciate which decisions are theirs to make. This interaction, support and decision making is governance. In successful family businesses each sphere has its own governance strategy. For example, for the ownership sphere, a board with advisors who are unconnected to the business can be used to help in decision making on behalf of the shareholders. The business sphere is governed by the senior management team.
Any family governance structure builds a strong family by providing a forum to:
- Set the vision for the family and define its philosophy towards the family’s relationship with the business and the businesses’ support of the family.
- Uncover and maintain the values by which the family and related enterprises will operate.
- Educate family about rights and responsibilities of ownership, family history and values, and prepare for the future.
- Establish and maintain an effective plan for ownership and key family leadership role succession.
- Celebrate individual and family milestones.
- Stay informed and communicate with owners.
- Recognize and resolve family conflict to promote harmony.
How a family tackles these tasks is contingent on how complex and how aligned the business, ownership and family systems are. The “right” family governance structure depends on the following factors:
- How many owners are there?
- How many generations are in the family? How many are involved in the business?
- Are owners serving in management roles? How many generations are in management roles?
- Are there non-family executives in place?
- How large is the business? What resources are available to family members?
- Do family members know each other? Are they in agreement about the business? Is there potential for disagreement?
- Who will be involved in family decision-making? How will decisions be made?
When working with families, we believe in counselling first and execution thereafter. We take pride in our focus on understanding the sensitivities and their implications for various members of the family. This helps us to create and run mechanisms in a manner that prevent disputes and ensure a positive and healthy environment for the family businesses to thrive in.
Following are some of the services we offer for the creation and ongoing management of family governance.
