1. Emphasizing management skills. The tendency from Phase I to focus on kinship shifted to an emphasis on skills, or a more business-like rationale for seeking a leader.
2. Reducing family managers. The families tended to create more formal arrangements to govern their involvement, which also helped to clarify roles, authority and responsibility.
3. Concentration of ownership. Family shareholders were reduced in number or bought-out. Sometimes this was due to family conflicts or coupes, but other times it was brought about by a family consensus.
4. Rebirth. Often new leadership gave way to fresh perspectives. As individuals became more comfortable in their roles, they expressed more confidence in their ability to lead, which included adding outside talent, adopting new strategies and sometimes moving away from the business’ legacy. Several businesses put structures in place to keep the business in check. Advisory boards were sometimes set up to allow the leadership to remain in the family while being surround by external experts.
For estate planning, this holistic view of family succession planning helps not only family members to better plan for and prepare their business for the transition from one generation to the next but it can help reduce the potential for future conflicts. While the process can be painful and froth with challenges, knowing what successful succession outcomes look like, can make the process easier.
If you are involved in a family business, our office would be delighted to talk with you about some of the legal steps that can be taken to not only protect your assets and preserve your legacy, but to reduce potential challenges down the road. I urge you to share this article with your family as a way to start your family thinking about the best approach to family succession planning.
