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Expecting the Unexpected in Family Business Transitions XPX Metro DC | January 16, 2014
| Date post: | 28-Nov-2014 |
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Expecting the Unexpected in Family Business Transitions
XPX Metro DC | January 16, 2014
Certified Family Business Advisor via the Family Firm Institute
Founded the Greater Washington DC Family Business Alliance
Introduction
Family Business Primer
Families – Who’s not dysfunctional?
Let’s throw money into the mix!
The Family
or
The Business
What’s More Important?
Family Wealth: Keeping It In the Family
Financial Capital Human Capital Intellectual Capital
The financial capital is used to enhance the human and intellectual capital of the family (and vice versa).
The bigger question is “How do you perpetuate family wealth?”
Family Wealth: Keeping It In the Family
Financial CapitalHuman Capital
Intellectual Capital
Owner dies unexpectedly Heir apparent dies
unexpectedly Unexpected disability
What Are Some of the Common Issues?
Substance or gambling abuse
Fraud – stealing from the business (family)
Kids either don’t want or can’t handle the business
Market changes (windshield wipers)
Siblings don’t want to/can’t work with each other
One sibling wants the “whole enchilada”
You get the proverbial offer you can’t refuse
Catastrophes/crises
What Are Some of the Common Issues?
The Godfather
It’s a Wonderful Life
Mondavi
Examples
GovernanceAdvisorsTransparencyCommunicationSuccession Plan
What Can We Do?
Qualified top management
Capable board of directors that includes outsiders
Family council
Constitution (a bit more on this later…)
Governance
Traditional – legal, CPA,
financial
Other – business
valuation, who else?
Advisors
Financial
Decision-making
With whom? All Principals
Transparency
Communication
Different from Transparency. Involves emotions and
expectations.
Important on multiple levels
The Single Most Important Thing!
Should Not
Address only one scenario
Simply be what you want
Should
Be revised/revisited every few years
Succession Plan
Family Constitution
A family is no different than a country
International Family Governance by Barbara Hauser
Family Wealth – Keeping it in the Family by James E.
Hughes
Perpetuating the Family Business by John L. Ward
Generation to Generation by Kelin Gersick, et. al.
Family Business, Risky Business by David Bork
International Family Governance by Barbara Hauser
The House of Mondavi by Julia Flynn Siler
Recommended Reading
Preventing the unexpected is impossible. Planning is necessary!
Conclusion
Family Firm Institute
Annual conference to be held in Washington, DCOctober 8 – 11, 2014
