Advising Family Companies
Family businesses face unique challenges. Leadership and investment decisions inevitably create discord. The consequences are often serious and far-reaching. Conflict typically destroys value. Finding equilibrium between family and business interests is key to success.
Defining a governance framework that separates business from ownership and defines a clear process for resolving issues, is important. For example, creating an Advisory Board, with a clearly defined role and specified responsibilities, staffed by qualified independent directors and paid commensurately, can work incredibly well. Independent decisions are made in the best interests of the business. Periodically reviewing how the Advisory Board is performing, is valuable as well. Based on a clear assessment of the strategy and the ownership structure, we proactively assist our clients in the competency-based selection of independent directors and advisors to bring these governance mechanisms to life. For many of our family business clients, we also periodically review the effectiveness of these governance bodies, and the competitiveness of compensation.
Founder transition is the most emotional and challenging issue that faces any family business. Strategy and the ownership and management structure should be reviewed. Preparing for this transition in advance is critical, and it needs to be thoughtfully planned.
It is important to work with the key stakeholders to prepare a succession process that encompasses both internal and external candidates, ensuring that the role and responsibilities are clearly understood. For many family firms, recruiting top executives from outside the family represents a major challenge. Aligning stakeholders is critical. The integration during the first twelve months is vital, to gain the trust of the family and to adapt to their working style.