expecting the unexpected in family business transitions · – family wealth – keeping it in the...
TRANSCRIPT
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Expecting the Unexpected in Family Business Transitions
XPX Metro DC | January 16, 2014
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– Certified Family Business Advisor via the Family Firm Institute
– Founded the Greater Washington DC Family Business Alliance
Introduction
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Family Business Primer
Families – Who’s not dysfunctional?
Let’s throw money into the mix!
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The Family
or
The Business
What’s More Important?
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Family Wealth: Keeping It In the Family
Financial Capital Human Capital Intellectual Capital
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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
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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)
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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?
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The Godfather
It’s a Wonderful Life
Mondavi
Examples
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– Governance– Advisors– Transparency– Communication– Succession Plan
What Can We Do?
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– Qualified top management
– Capable board of directors that includes outsiders
– Family council
– Constitution (a bit more on this later…)
Governance
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– Traditional – legal, CPA,
financial
– Other – business
valuation, who else?
Advisors
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– Financial
– Decision-making
– With whom? All Principals
Transparency
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Communication
● Different from Transparency. Involves emotions and expectations.
● Important on multiple levels
● The Single Most Important Thing!
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– Should Not
● Address only one scenario
● Simply be what you want
– Should
● Be revised/revisited every few years
Succession Plan
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Family Constitution
● A family is no different than a country
● International Family Governance by Barbara Hauser
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– 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
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Preventing the unexpected is impossible. Planning is necessary!
Conclusion
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Family Firm Institute
Annual conference to be held in Washington, DCOctober 8 – 11, 2014