Five strategies to preserve the legacy of your family business for future generations.
Many successful business owners face a common problem – how to ensure your business remains family-owned from one generation to the next. Laying the groundwork for sustaining a multigenerational family business involves making critical decisions around ownership, management and family communication in the form of a governance structure.
By establishing an objective governance structure well in advance of the next leadership change, you can reduce the chances of future family conflicts, and improve the likelihood that decisions about the business will be made in a way that aligns with your family’s long-term vision.
What Can Go Wrong?
Consider the case of a client, the owner of a large technology business who passed away, leaving equal shares of his business to his three sons. One son succeeded his father as president of the company, while the other two were not involved in the business. Aside from basic estate planning, before his death, their father did not outline his long-term vision for the business, nor did he create a formal governance structure for how information about the business would be communicated to shareholders or establish guidelines for voting the shares. As a result, within a few years after his death, the sons who did not work in the business voiced concern over the lack of information they were receiving about the company from their brother. They complained that with no “seat at the table,” they lacked the ability to offer their input and ideas on the strategic direction of the business. Concern soon turned into animosity, with accusations that the brother running the company was mismanaging it and intentionally withholding information. Although the brothers eventually agreed on a path forward, the family dynamics were irreparably harmed.
To avoid similar conflicts within your family and lay the foundation for your own governance structure, download our paper on five strategies that will help you preserve the legacy of your family business for future generations.