Page 34 - GBC spring 2018 eng

“It is never too early to start your family business succession plan. The sooner you start, the less conflict there will be and the easier the discussions and decisions surrounding succession, family and the business will become.”
FAMILY BUSINESS RULES
When the questions listed on the previous page remain unanswered, each family member will have a different expectation as to how each of these questions will be answered and this can often lead to con ict amongst family members.
However, imagine if all of those questionswereansweredandclearly addressed in a Family Business Constitution (your family business rules), which would be developed primarily by yourself (the owners) and the family members who are active in the business.
These rules would be commu- nicated to the entire family includ- ing spouses and children at least once a year. This would paint a clear picture for all family members and facilitate the transfer of the business to the next generation.
THE PROCESS
It is never too early to start your family business succession plan. If you currently own a business and know that some of your children, nieces, or nephews are interested in a career in your business and you are hoping to keep it in the family, then you are ready to start!
The sooner you start, the less con ict there will be and the easier the discussions and decisions surrounding succession, family and the business will become.
The process I use as a Family Business Practitioner starts with individual interviews of the entire family (both active & non-active) as well as spouses and children above the age of 14.
These interviews allow me to understand what is similar, differ- ent, or uncertain, with respect to everyone’s expectation surround- ing management and ownership succession.
Based on these interviews, I recommend guiding principles, family business rules and succes- sion strategies that I think the entire family will endorse and that will help them move forward. These principles and rules then become the base upon which the accoun- tants and lawyers do their work.
ANECDOTE: DISPUTE RESOLUTION PROCESS
I had a client who was nearing his late eighties and was ready to retire.
He had three adult sons whom were more than competent to run the business and whom had been working in the business for over 15 years. However, he did not feel ready to formally transfer manage- ment responsibility or ownership
to his three sons. When I rst met him, it became clear that his issue was not related to the technical component (estate freeze, tax, valu- ations, trusts, shareholders agree- ment) of the succession plan, but rather with the non-technical component (the family component).
He was worried about trans- ferring his business to his three sons because they did not get along. He knew that three sons who don’t get along and can’t make a decision together could easily destroy the business he spent his life building.
After meeting with all family members and recommending a number of succession Guiding Principles supported by some Family Business Rules to help guide his decision-making, the owner nally felt comfortable transferring the business.
One of the most important Family Business Rules for this family was agreeing to a Dispute Resolution Process that would allow family members to effectively address and resolve con ict. Today, the three sons run a successful family business and also have some of the next generation working alongside them.
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