Succession is an emotional and exhausting time for many family businesses. If dealt with incorrectly, it can result in dire consequences for the business, such as its reputation, stability and success. An extensive amount of research has found that more than 75% of family businesses fail to survive past the first generation, and roughly 85% fail by the third generation.
When a succession event takes place, there are two possible results: a business may either grow or decline. An inexperienced successor may lead to the slow terminal decline of the family business and in some cases its collapse.
There is a huge amount at stake. So, it is important to create a robust plan, with successors, transition experts, and the relevant parties for a successful transition.
This guide provides an overview of all the key advisory & execution support that families may seek – including succession and restructure planning, performance management, family governance and the transition plan.
Family Governance & Business:
In usual scenarios, the Head of the business is the head of the family who is responsible for decisions like choosing a successor. However, if he/she makes a decision that does not align with other family members, there can be issues. We help to introduce a governance framework that benefits the business and family – which resolves these conflicts.
Succession & Restructuring Planning:
Choosing a Successor is one of the most important parts of Family Business Planning, many factors have to be taken into account before making the final decision. It has been seen many times that the chosen successor might not be interested in the family business or the other members do not agree with the decision, that is why it is necessary to plan accordingly.
After choosing the heir it is necessary to train them from a young age for the challenges they are going to face later on. We mentor the next generation from an early age about the business values, train them with external and internal work exposure and identify a suitable educational background for them to pursue which helps them take the business further.
Sometimes Business has to go through the divestiture of a fraction of a company to re-establish themselves and it is essential to do it strategically. To maximize the business’s fair value the unit which is sold should have a mix of intangible assets like patents and customer data and liabilities. Our Multidisciplinary team can assist with divestiture business cases carried with the best mix of assets and liabilities, and the settlement method to pay for consideration for sales.
Leadership Team Development:
Every Business needs new talent to explore the new possibilities and bring a fresh perspective to the company. Family businesses tend to attract new talent because their employee retention rate is high even in tough times. But the challenge lies in the management of new talent and team-building around the growth of professionals in the family. That is why proper leadership should be promoted among family members of the organization. We help family businesses to hire new talent and help them in team development at every step.
Performance Management:
Performance Management is a powerful tool to maintain business, the gains and losses have to be evaluated at regular intervals and a decision has to be taken accordingly. If the business acquires more losses than gains in subsequent years, to maintain stability it may propose an acquisition or merger with another company. We help our clients with proper performance management by providing them regular performance reports and if needed helping businesses explore options.
Transition Plan and Decision Making:
When businesses go through any kind of transition phase, there has to be a properly executed plan running in the background. The Transition Plan helps to combat any discrepancies that can occur in a sensitive situation like a transition phase of a company. The transition plan also helps in maintaining the legacy and values of the company. We help businesses to make proper transition plans which help them transition seamlessly.
Key Takeaway:
In family business succession planning, selling should be active and not reacting. To maximize the business’s fair value, it should blend the assets and liabilities of the unit. Our multi-disciplinary team can assist with divestiture business cases carried with the best mix of assets and liabilities, and the settlement method to pay for consideration for sales. Advice to family-run businesses on the exit structure, timing, run out models, support years etc.
Through in-depth expert skills of continuity in family business planning, we at Annveshan develop an overall plan for the seamless transition of leadership, management, ownership, and the family’s assets. Our team of experts help in assessing the value of the business and unlocking its full potential and getting the right price for it.
We are the experts in:
- Mentoring the next generation from an early age about the family business values.
- Assisting families in drafting a matured policy on ownership, control, power, and brand name sharing amongst various businesses and assets of the family and its transition.
- Advising them on the arrangements between the family and professionals about the control, ownership, veto rights, etc.
