Family Business Advice Part 3 – Guiding Principles and the Advisor’s Role

In undertaking any assignment associated with family businesses it is important to bring to bear a range of traditional disciplines from fund raising to tax, from estate planning to strategic planning and from legal advice to personal wealth planning and pensions. Without such integrated “holistic” advice there is a danger of the advice not being relevant to the “big picture”, which is the long term future of the business and harmonious family relations.

This advice is given against the background of a number of guiding principles the most important of which is to attempt to keep the shareholding base as narrow as possible. We explore how a Family Council representing each bloodline of a wide shareholding base can limit disputes through the creation of an internal market for shares and the setting of a valuation criteria and a dividend policy.

Choosing the individual or individuals to provide management succession can be very difficult and we explore the key attributes of a successor and how the earlier generation may be prepared to risk passing on control. Finally we discuss the advisors role and the importance of the adviser being seen as independent and not a representative of one faction or another – perhaps one of the most difficult thing for an advisor to achieve.

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