Handing over the baton 8 October 2024 - We have all seen the images of the Olympic athletes performing at the 4x400 meters relay at the games in Paris struggling with the handover of their baton in the final meters of their leg. Although slightly different this is how a leader of a Family or Founder Controlled Business might feel about the handover over of his business to the next generation. The tension before the big handover, the essence of timing, the meticulous preparation, but also the potential disappointment of dropping the baton in the full limelight with the finish in sight. Having the weight of the future of the family on your shoulders requires you to make sure you prepare and, to the extent possible, practice this handover. As the adage goes, “A family business is not a business you inherit from your parents, it is a business you borrow from your children.” In this article we want share our views on succession planning for family and founder-controlled businesses. With baby boomers coming to the age of retirement (or being well past it) the world is facing the largest transfer of wealth from the baby boomers to the next generations. If that transfer includes the control of a company, there is a lot to consider. It is important for families to start by examining their relationships. In a family context, there are for example no clear boundaries between professional and personal relationships. The Family Business Handbook[1] by Harvard Business Review identifies three distinct types of relations which are simultaneously at play. Family Relationships: this type of relationship trades in emotions both love and negative emotions. Family relationships are the longest relationship in one’s life. They can be identified through the following key words Inclusion, Forgiving, Protecting, Supportively Challenging Business Relationships: a set of hierarchical relationships with a… Continue reading
Succession and Competitive edge: Two Challenges Keeping Family Business Leaders Awake 4 July 2024 - Succession and Competitive edge: Two Challenges Keeping Family Business Leaders Awake Among the many challenges you as leaders of Family and Founder Controlled Businesses (FFCB’s) face, succession and gaining or maintaining a competitive edge might be the ones keeping you awake. They may seriously impact the future of your business as well as the level of future involvement of the family and founders. Two issues that might keep family business leaders awake at night 1. Succession: transferring control of the company to the next generation The first item that will creep up higher on the agenda over time is how the family wants to transfer the business to the next generation. This step is something that is never taken lightly as it has an impact on the future of the company but also on the family dynamics. As families attempt to preserve their entrepreneurial legacy, they often encounter a myriad of issues that can jeopardize the continuity and success of the business. These challenges are multifaceted, encompassing emotional, financial, managerial, and legal dimensions. It leaves the family with both a significant opportunity and a daunting challenge. How to structure a transfer is now even more topical due to the popular HBO series Succession but also due to less entertaining articles in mainstream media about the ageing of family leaders in a C-suite position. According to research from EY and University of Sankt Gallen the average age of family board members (either non-executive or executive) is 62 years and continues to rise 1. The concern is not that this average is currently at 62 years but that it continues to go up. Two years ago, it was 60 according to the same research institution implying that transfer to the next generation is only happening at a very slow pace. The urgency for transfer to… Continue reading
