Issues & trends - solutions

Question:
We have a very large family Business which turns over in excess of $300M. My father is within 5 years of retirement and has employed a non-family Chief Executive Officer to take over the leadership once he decides upon a date for retirement. There are a number of potential successors in the family and several family problems have started to spill over into the business. How would you approach planning the succession and dealing with the specific family issues?

Answer:
My initial reaction is that you have a number of issues that need to be addressed. In most family Businesses the planning requires the talents of several consultants and professional advisers. Therefore before you start, you need to ensure that you have consultants that can work with each other. Communication between these professionals is very important so that there is a uniform but controlled approach to dealing with the issues. It is important that the family issues and the business issues are separated and dealt with in the right processes. In the first instance the family should establish a Family Council to deal with the family issues. It may be advisable to appoint an external Chairman for the early meetings of the Family Council because they may be very emotional meetings.

To deal with the business issues you should appoint a Board and consider the use of external non-family, non-executive directors. Once the board members understand the dynamics of the family, it may be advisable to appoint one of the non-executive directors as Chairman. This will depend ultimately on the effectiveness of the board meetings. With some of the issues you have discussed, you may need an Organisational Psychologist, a Board Governance expert, a solicitor, a family business consultant and perhaps a financial planning advisor.

In the beginning a Project Plan will need to be established and the Family Business Consultant will most likely be appointed the Project Manager. A timetable will be established and monitored by the Chairman. In the end, a full process from establishing the Owner’s Plan, the Family Plan, the Business Plan, the Succession Plan and finally, the Estate Plan, will need to be visited to ensure the leadership and direction of the family Business is properly managed.