Optimizing success across the intertwined spheres of family and business requires trusted advisers that understand the concerns and emotions of owners—and possess deep expertise in the critical management disciplines from strategy to organization.
Family businesses come in all shapes and sizes, but they are prevalent, resilient, and highly successful in all corners of the globe. Family-owned companies share many of the same strategic and operational concerns as their nonfamily-owned competitors. But they also face distinct challenges born out of the complexity of combining family and business concerns. How can families deal with issues across both spheres, sustaining their business value and closest relationships?
In addition to our full range of consulting services on corporate finance and strategy, organization, marketing and sales, operations, digital transformation, and more, we also help families in business navigate their unique challenges, among them:
We develop deep relationships with family business owners. We understand their distinct risk profiles, longer-term growth perspectives, and approach to stewardship. And we develop bespoke solutions for family-owned companies by answering critical questions.
Although corporations are required by law to embrace formal governance rules, the families that own them are not. But good governance of family businesses is essential. The lack of a clear and mutually agreed governance structure can cause unnecessary conflict and destroy business value. Families need to take four steps to define an effective model for governance of family businesses.
Agree on the family’s overarching goal. As the owner, the family has the right to run the business as it chooses—but the family must choose. Is the goal to run the business to maximize wealth creation for current family shareholders—or to create opportunities not only for this generation but also for future ones?
Anticipate potential family hot spots. Any governance framework needs to be designed with an understanding of the issues most likely to jeopardize family harmony. Every family is different, but common examples include potential tension on leadership changes, wealth sharing, or intergenerational equity. Unless these issues are considered up front, small disputes can spark larger rifts that can threaten both family and business.
Understand the family and business context. As owners, it is important for family members to understand the business and the challenges it faces. What is the ownership structure and succession plan? What are the business’s holdings and its future strategy? What constraints—financial, regulatory, and societal, to name a few—does it face?
Create structure for the family. Good governance of the family business requires a structure that reflects and address the decisions and learnings from the prior three steps. Many families create a shareholders’ agreement laying out the definition of family and rules for family owners and managers—and establish governing bodies and a family code of conduct.
Untangling Conflict: An Introspective Guide for Families in Business
By: Janmejaya Sinha, Carol Liao, Ryoji Kimura, and Brittany Montgomery
Drawing on decades of lessons learned from the authors’ work supporting families and the businesses they own, this book guides family businesses through an introspective process that helps them determine their own bespoke approaches to preventing and mitigating conflict.
Conflicts arising from emotions are rarely about material issues like money or other matters of self-interest. These "soft" issues are often harder to resolve than the "hard" stuff.
By anticipating and addressing key issues, family owners can reduce risk, manage conflict, and promote prosperity.
