Good afternoon,

We hope you are well. We are delighted to welcome you to the second ezine from FBS. This month, we investigate how to choose the right advisor, present an in-depth case study which illustrates the type of emotionally charged discussions that often arise in family businesses and present an article on selling the family business. We hope you find these articles useful.

If there is anything we can help you with, you are welcome to contact us here or call us on 0141 222 2820. 

Very best regards,
The FBS Team

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Family business advisors should know all about how time changes everything. Our goals, aspirations, perspectives and even our tastes change. Only very recently I found my taste for whisky had, after a period of some years, returned. I found the route back to the water of life had been made easier by contemplating a decent blend, rather than pure malts, which can often be “difficult”. I found an interesting parallel between that experience and the problems Family Businesses have in getting the right advisor.

The relationship between Family Businesses and their advisors can often be perplexing. The Families have difficulty understanding the meaning and context of the technical advice they are receiving, when viewed from their perspective. Advisors are often bemused when what they believe is excellent advice does not appear to be followed.

Indeed, the issue is of such significance, that recently the Society of Trust and Estate Practitioners (“STEP”) and the Institute for Family Business (“IFB”) held a focus group on this issue, and published their findings in the paper “Engaging Advisors: Family Business Research”.

In itself, it is an interesting paper, which seemed to adopt, as a starting point, the premise that “many legal and financial professionals lack the interpersonal and communication skills necessary to work effectively with multiple generations of family business stakeholders.” Quite a harsh assessment, especially from a body representing advisors – but these were the opinions of the families, and so have to be contemplated, however painful. Throughout, the paper returns to “soft skill” themes, criticising advisors for being too “deal focussed” in their service delivery, and too keen to convert their advice into fees via an hourly rate. Some thought provoking ideas are put forward. For instance, it suggests that “Firms or advisors seeking to work with family businesses should develop a set of cultural values that can bring together the hard skills and soft skills”, or “Advisors need to bring an unusual mix of empathy, impartiality and process management based on deep experience to be successful” – presumably in obtaining useful outcomes for their clients.

If you like, rather than pure specialisms – the single malt – what is needed is a blend of skills and attributes.

Read the full article here

Some owners start businesses with sale being the end in mind. For others, sale may seem to be the only workable answer to the question, “what next?”

What if the next generation are neither willing nor able to take over the business; does that make a sale inevitable? 

If your family would not consider themselves to have a “family” business without a family member at the helm, then if there is no one who is able and willing to do the job, maybe it’s time to sell?

An alternative to a sale would be to recruit outside managers and move the business to being family owned but not family run.  In this case the family need to be willing and able to be active owners who govern and oversee their investment in the business, and the governance structures and processes in your business need to take account of the separation and balance of powers between owners and their board

If this is not a feasible option for the family then a sale is likely to be the only way forward. External market considerations can, to an extent, dictate the timing of any decision to sell, for example an active deals market or consolidation in the sector.  But there are also internal forces that are equally important when it comes to planning a sale and which are more under the family’s direct control.

Read the full article here

This case study illustrates the type of emotionally charged discussions that often arise in family businesses, especially during generational transitions, and how a family business consultant can help.

Susan was studying at university when her father, the founder of their family business, had a heart attack. Susan left university without finishing her degree and joined the business to help her father run the business.  She used to say that she did this willingly, having wanted to be in the family business from a young age, but later on Susan felt that she was not given as much credit for this as she felt was due.

Susan was one of four siblings.  Her eldest sister never showed any interest in the business but over time her younger sister and brother both joined the business.  Susan felt that her father did this in order to “keep everyone happy”.  From a parenting perspective, it is perhaps understandable that someone who has suffered a life threatening illness wants to ensure that his family are “looked after” and one of the ways in which her father did this was through the business by creating jobs for Susan’s two siblings.  Susan very much saw this as bad for the business and resented the rewards paid to her siblings given, in her opinion, their level of contribution and performance.

As time went on, the increasing demands of the business’s growth exposed Susan’s siblings shortcomings. And in the meantime, her father never really recovered his health completely and relied ever more on Susan, making her feel that she was “pulling everyone along”.

Susan became increasingly frustrated about the lack of any progress with her father’s “retirement”.  Given her “sacrifice” (latterly she did tend to see it in this light) Susan had always expected that she would take over ownership and leadership of the family business but her fractious relationships with her siblings was a concern to her father who, despite his ailing health, hung on in there because it seemed to enable people to just get along.  He also did a number of private deals with each of his children, including providing loans to buy property, all in an attempt to “keep everyone happy”.  Everyone knew, instinctively, that this could not last forever but Susan’s siblings felt protected by their father and hence they tended to focus their criticism towards Susan for pushing their father to make a decision about his succession.

Read the full case study here

FBS was established in 1996 by two of the world’s leading practitioners in the field of family business consulting.

FBS has developed a consulting service that is unique to FBS and that enables FBS to provide help to families in a consistent and cost effective way. It is tried and tested, and more importantly, provides a safe framework within which families can discuss and resolve the issues they face.

This month -

George Stevenson spoke at the annual Funeral Directors Conference in Edinburgh.

Susan Hoyle was guest expert at a “Business Lunch with the University of Highlands and Islands” in Inverness on the subject of “How to sack your father”.

Liam Entwistle spoke at an event organised by the Law Society of Scotland and gave a webinar on "Keeping your Family Business Clients Immortal" through CLT Training.

Meet the FBS team here

Contact FBS here or call us on 0141 222 2820 to arrange a meeting to discuss your requirements.