One of the greatest business challenges for patriarchs and matriarchs is planning the transition of their family businesses to go on without them.
Lingering doubts over whether the next generation is up to the task keep many parents awake at night.
The anxiety can stem from a reluctance to relinquish control and concerns over the aptitude and attitude of the next–in–line.
And it’s not just uncertainty about the long-term future of the business.
The implications for the wealth, legacy, and reputation of the family also come into account.
In my experience advising business families, key sources of stress include:
A lack of, or breakdown in, communication is the most common cause of angst for all parties involved. Without effective and open communication from the start, the succession is most likely destined for failure and maybe the courtroom.
It is not uncommon for parents to be uncertain about handing over control of the company to the next generation. The so-called “sticky baton syndrome” is not unique to baby boomers, it’s something parents have struggled with throughout history.
For those that have often spent their lifetime growing a business, the readiness of the future owners is a common concern. Change always brings with it an extra element of risk and that can be hard for many owners to accept. In the same way, the children may also lack the confidence, or capability, to take the reins.
Sense of purpose
Succession is not just a numbers game. For successful business families there is usually great emphasis placed on the purpose of the enterprise and family legacy.
Parents often question whether the next generation will share their same values.
Steps to success
Achieving a successful business transition takes into account these common concerns in setting a course for sustainable business growth that benefits all the relevant stakeholders.
The key is planning and communicating the right processes and tools for the next generation, so it doesn’t all implode.
It’s a challenge for which families require experienced and objective assistance.
This can involve external help with having difficult conversations with family members and preparing inexperienced children for when their time comes to manage the business and inherit wealth.
As such, more Australians are turning to Family Office structures.
A Family Office, or a Private Office as it’s sometimes referred to, is a family-owned and controlled structure that manages private wealth and other relevant family matters.
A Family Office can bring a more structured and disciplined approach to the management of succession and inter-generational wealth transfer. It does this by introducing a high level of family governance into the process of managing and administering wealth as well as coaching and education services to assist and prepare the next generation.
For the William Buck Family Office team this usually involves a series of meetings with the entire family, collectively and individually. During this process, we
can address the key issues and as we work through our programs, we ensure we progress toward actionable solutions.
By this personal approach, a family is in the best possible position to:
- Protect a lifetime of hard work with a successful transition to the next generation
- Educate the next generation on how to be responsible owners of family wealth as well as assets, and
- Identify shared values, family goals, and define a clear purpose for the family’s wealth.