expecting the unexpected in family business transitions · – family wealth – keeping it in the...
TRANSCRIPT
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 Capital
Human 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
– Governance– Advisors– Transparency– Communication– Succession 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
