Most wealth is created through entrepreneurship: taking a risk to start a business, and growing that business. Some families with generationally “old” money (i.e. more than 3-4 generations removed from the wealth creator) may have their family wealth in passive assets, and the entrepreneurial spirit that created it is long gone from memory, sometimes irretrievably lost.

For families that hold (or acquire) operating assets, it’s important to maintain that entrepreneurial spirit in subsequent generations, but that has its challenges. Rising gen family members born with spoons in their mouths often don’t share the hunger (or need) of wealth creators.

To do this, families need to tell stories of the bad times as well as the good, and create space for rising gen family members to become entrepreneurs of their own, rather than being in the shadow of others (external mentors can often help). Operating assets, especially those held by the family for a long time, need the governance that can facilitate regular strategic renewal (which may need entrepreneurial thinking) to ensure their long-term survival.

Consider This: Do family members know the story of how the family wealth was created? When was the last time an operating business you own did some serious strategic planning? Has anyone assessed whether there is “stale thinking” in the family business leadership?

Original articles: https://hbr.org/2020/05/is-the-next-generation-of-your-family-business-entrepreneurial-enough, https://www.stamfordadvocate.com/business/article/5-Factors-for-Planning-Your-Entrepreneurial-Legacy-15204834.php, http://entrepreneurship.babson.edu/barber-family-entrepreneurship-journey/, http://entrepreneurship.babson.edu/the-power-of-the-entrepreneurial-family/

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: https://www.transitionbook.co/member-area/6cf3b890596

conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

Can you have the best of both worlds? Family businesses have to tread a fine line: they must compete like any business, while also maintaining harmony amongst the family – both those who are involved in the family business and those who are not. There are a few common themes that help families maintain this balance:

1. Trust is essential, and what builds trust are good communication and transparency. Anywhere information is not provided, people make up answers to their questions instead, which can lead to the spread of incorrect information, and the erosion of trust. A good governance structure can help avoid this and preempt the potential loss of trust.

2. Disagreements and disputes within businesses always arise, and in family businesses, they can spill over into personal and family life. Families need to learn how to “disagree well” – to raise issues about the business and about the family in a structured way rather than ad hoc over the dinner table, and to agree on how disputes will be resolved – that usually translates to internal processes.

3. Because family members have multiple roles, setting boundaries is especially important. This means boundaries between work life and home life, and treating family space as ‘sacred’. Short breaks from work to indulge fully in family time can be very healthy. The issue of roles becomes especially important as family members transition from doing many different things within the business to bringing in professionals/externals – this is a time to narrow and define their roles within the family enterprise.

Consider This: If it was “family vs business” in your family, which one wins? How often do you mix family & business? Do you have agreed processes for tabling issues and resolving them?

Original articles: https://brandequity.economictimes.indiatimes.com/news/business-of-brands/top-biz-family-mantra-company-first-kin-second/67682903, https://www.smartcompany.com.au/partner-content/articles/family-feud-how-to-stop-family-business-disputes-from-following-you-home/, https://www.valuewalk.com/2019/01/successful-balance-between-business-and-family/

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: https://www.transitionbook.co/member-area/6cf3b890596

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

While the family business may be delivering good returns, how much is it actually worth? Often, family members are disappointed that the market value does not reflect a large enough multiple, because they are unable to look at the business as an outsider (and potential buyer) would.

The first article has some classic ‘value drivers’ expressed in terms of growth and risk reduction. What I think this is missing from this model is the most important question a family business should ask: what is the business worth with family members vs what it is worth without them? If your business is overly dependent on family talent, then it lacks intrinsic value that can be realised in the market.

On that note, the second article discusses the process of bringing in outsiders into the family business. Whether in management or on the board (or advisory board), outsiders can add significant value because of their perspective, and also their ability to mediate conflict and help ensure all family members voices are heard. In order to be effective, the family must be prepared to listen and learn.

Consider This: Have you considered the value of your family business without family members? Are the business accounts run at arms length so they can reflect the true value of the business? Are external advisers viewed with disdain or for the value their experience and diversity can bring?

Original articles: https://www.bakertilly.com/insights/thinking-about-selling-how-to-grow-the-value-of-a-family-owned-business/, https://www.forbes.com/sites/nextavenue/2019/01/29/hiring-an-outside-expert-for-your-family-business/#7b2749bc61ed

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

A common challenge for family businesses is when the rising generation have no interest in taking over. This can be especially common in sectors like manufacturing or farming which may be considered an attractive or exciting career path for younger family members to join.

There are two concerns for the family members currently in control: (a) who will look after the business? (b) who will look after the customers? Both of these are important, because family businesses don’t just want their wealth creation vehicle to continue, they also want to perpetuate their own unique relationship with their customers, which is often far deeper than ‘transactional’ and are an expression of the family’s values.

Two of the articles below tell stories of family businesses facing this very challenge. The third one asks some hard questions: do family businesses need to be perpetuated for their own sake? Is their purpose purely economic or also social? These are good questions for any family to ask itself (with at least 2 generations part of the discussion).

Consider This: If your children don’t want to take over the family business, what will become of it? What is your legacy, aside from the business?

Original articles: https://www.chicagotribune.com/business/ct-biz-manufacturing-succession-planning-20190103-story.html, https://www.biztimes.com/2019/industries/human-resources-management/what-happens-when-theres-no-one-to-take-over-the-family-business/, https://www.businesstoday.in/opinion/columns/hera-are-some-guidelines-for-perpetuity-in-family-business/story/306242.html

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

As a wealthy family, one sure way to find out the answer is to ask (too often parents don’t bother). According to a Wells-Fargo survey of Millennials, more than 90% of children say they want to inherit their parents’ values, not their wealth. Some 84% want top sustain and build on their family’s legacy. This should be very heartening news for parents.

In a previous newsletter, I mentioned the relative importance of education and networks which families can provide to their children. Clearly, it’s not all about money!

Regarding philanthropy, 80% of children surveyed say the family’s giving aligns with their own values, but 40% want more of a say.

The survey shows the importance of talking about wealth and legacy within a family, and how learning between generations can go both directions.

Consider This: Have you asked your children what the family wealth means to them? What is most important to them about their lives? Conversations like that aren’t always easy. It’s important to make ‘space’ for them where all voices can be heard.

Original article: https://www.businesswire.com/news/home/20190109005028/en/Children-Millionaires-Inherit-Parents%E2%80%99-Values-Wealth-Wells

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

What proportion of your family wealth is tied up in the operating family business? According to Camden Research’s recent report, succession is a greater priority for families than wealth preservation. Of the two, succession is surely the harder to achieve.

While we all push cliches and statistics about the survival of family businesses over three generations, perhaps we should be broadening our perspective? A family operating business is one store of wealth for a family, and one which is capable of employing multiple family members.

Another phrase currently doing the rounds is “business family” – a family whose wealth is well diversified and includes a number of operating assets. Such a family must focus on establishing strong governance for their assets, including rules by which family members can be involved in the operating assets, or draw on the family wealth to start new ventures of their own.

Such a structure, done well, is far more robust from a succession perspective, as it allows children who may not want to join the family business (and this is an increasingly common phenomenon) to do their own thing and still be part of the family asset base.

Consider This: Do your children want to follow in your footsteps? Have you ever asked them? Are your parents pressuring you to follow in their footsteps?

Original articles: http://www.campdenfb.com/article/succession-beats-wealth-preservation-top-priority-families, https://www.inkstonenews.com/business/chinas-big-family-businesses-lack-succession-plan/article/3000444, https://www.sunstar.com.ph/article/1782733/Cebu/Business/Soriano-Is-it-a-family-business-or-a-business-family

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

When it comes to advisors, I have two simple rules:

1. Get good advisors
2. Listen to them

Family advisors need additional skills because they must work with the various members or governance structures of a family, and key people & structures may change with time. They need to know about communication, in order to help the family members themselves communicate well.

They need to understand family dynamics, and get to know the ins and outs of the families they deal with. They may need to act as facilitators of family discussions and formal meetings, to help the family develop the ability to have open discussions and make collective decisions. To do this effectively, they need to be independent, and have the ability to say things that the family needs to hear (even though they may be difficult or confronting).

They, or their firms, need to be able to talk to multiple generations within the family, so as to maintain a parallel transition – as generational control passes within the family, the advisor relationships may also change. As part of that transition, it may be helpful to bring younger family members into advisor discussions.

In addition, they may want to be across emerging trends like impact investment, cybersecurity, and online reputation management.

A family advisor is so much more than a wealth manager, or the family lawyer or accountant. It can be rare to find all the skills needed in a single individual.

Consider This: Do you have an independent family advisor? Are you able to discuss anything the family needs with that person? Does that person have a relationship with multiple family members or across multiple generations? When did you last do an audit of your advisor relationships to ensure they are meeting the family’s needs now and in the future?

Original articles: https://www.forbes.com/sites/francoisbotha/2019/10/18/the-top-5-new-generation-advisors-every-family-office-needs/#586314691369, https://www.investmentnews.com/article/20191118/FREE/191119941/ria-consolidation-could-put-2-4-trillion-in-play-over-next-decade, https://www.ftadviser.com/your-industry/2019/11/29/advisers-urged-to-include-clients-families-in-meetings/, https://www.fa-mag.com/news/the-ultra-wealthy-prefer-multi-family-offices-to-wealth-managers-53825.html, https://www.forbes.com/sites/dennisjaffe/2020/03/18/family-wealth-advisors-need-skills-in-family-dynamics/#34154180ecb2

If you are a business owner, lawyer or accountant to them, my advisory services may be the perfect match to navigate the tough decisions in strategizing #intergenerational relationships.

There are a number of use cases where I have worked with families that may be adjacent to your practice. Let me help you:

· help family develop shared vision, charter etc
· mediate family conflict management
· mentor rising generation
· coach family through the emotional side of business sale – before, during, after
· help family businesses with ‘soft’ aspects of succession planning

Lets Talk

conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

How to maintain family wealth through generations? Get the best financial advisors and managers for operating assets? Other things are more important.

Families of wealth must learn how to work together in the sharing of assets. A key part of that is to integrate their wealth management with their values. That means the values need to be articulated within the family. Then, the family needs clear and open dialogue discussing values as well as financial assets, and why preserving wealth matters to the family and the world around us. That is the foundation upon which successful transition is built.

To raise the next generation responsibly with wealth may require adapting the family’s middle-class orientation to add new strategies where solid values are taught and demonstrated. Large sums of money can have damage on children’s ability to craft their own lives and break out of their parents’ shadow.

When people base their self-worth on financial success, they experience feelings of pressure and a lack of autonomy.

Few families who come to wealth have been prepared for these tasks. They often don’t know these new strategies are even necessary. That is where external advisors can be helpful.

Consider This: Has your family articulated its values? Does that include the values of the rising generation? What is your family’s approach to educating the rising generation with the appropriate values so they can be comfortable in their own skin and good custodians in the future?

Original articles: https://www.coastalbreezenews.com/articles/the-value-of-your-values/, https://bigthink.com/politics-current-affairs/great-wealth-transfer, https://www.valuewalk.com/2020/02/family-wealth-planning/, https://www.scmp.com/presented/business/topics/defining-family-office-landscape/article/3076183/what-chinese-family, https://nypost.com/2020/04/10/investing-life-in-money-leads-to-lack-of-community-study/

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

Philanthropy can be a great way to engage different generations in a wealthy family, and for family members to find purpose where there is no imperative for paid employment. It’s worth keeping in mind the intergenerational differences and trends in giving so that the family giving experience can be as positive as possible.

The Blackbaud Institute’s report on the next generation of American giving has some useful insights. Giving priorities differ by generations, but health, religion and local social services are still high priorities. Gen X and Gen Z are disproportionately committed to animal-related causes.

Older donors consider monetary gifts are their greatest form of impact, while younger donors value the importance of volunteering time and advocacy, and have embraced peer-to-peer fundraising such as through running and cycling events.

There are a number of mindsets that drive giving (responsibility, financial stewardship, planning, spontaneity, activism and recognition), and these carry different importance with different generations. That in turn will drive their choices for whom to support and how to support them.

The full report has plenty of charts and is an easy read, and I recommend it for anyone who is active in the philanthropic world.

Consider This: Who makes philanthropic decisions on behalf of your family? Are these communicated to the family? Have you considered the ways philanthropy can be used to drive closer connections between the generations and convey the family legacy?
Original article: https://institute.blackbaud.com/asset/the-next-generation-of-american-giving-2018/

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

The essential problem family businesses must deal with is conflict of interest, which arises when people have multiple roles – in the business, as an owner, and as a family member – that can potentially conflict. Thinking about the issues of a family business in this way is a good path to mitigating the challenges they can bring.

Establishing explicit rules is a good start, and this article covers several good ones: only put family members on the payroll if they have an active role in the business, communicate clearly and honestly with employees, separate family decisions and business decisions, and create boundaries between family and business each with their own decision-making process (and group).

This is something I cover in the mini-course “Culture of Acceptance”

Consider This: Does your family have explicit rules regarding how the family business operates and is governed? How do family members view the family business (or family operating assets)? Think back to a recent issue within the family and consider whether or not it relates to a conflict of interest between the multiple roles that family members occupied.

Original article: https://www.inc.com/guides/201102/7-rules-of-conduct-for-family-businesses.html

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://transitionbook.co/conflict-resolution

#conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship