INSIGHTS & PUBLICATIONS

Family Business Advisory

One of the oldest forms of business organisations in the world are family owned businesses. The oldest family business house, as recorded and tracked, is Nisiyama Onsen Keiunkan, of Japan. Established in AD 705, they own a spa & hotel built on a hot spring in Hayakawa. They became the oldest business only when Kongo Gumi, a construction business (temple builders) house also from Japan, that was established in AD 578, succumbed to excess debt and unfavourable business climate in 2006, while it was led by the 40th member of the Family. Stiftskeller St. Peter (Austria, established in AD 808) in the Restaurant business, Chateau de Goulaine (France, established AD 1000) in Wine, Fondaria Marinelli (Italy, established AD 1000) in Foundry and Weihenstephan (Germany, AD 1040) in Brewery are the oldest known family owned businesses in Europe.
These businesses have been under family control for over a thousand years. While the corporate houses of today have five, ten or twenty year strategic plans, the successful leaders of family owned businesses try and look as far as a hundred years ahead.
Pricewaterhouse Coopers estimates that around 90% of the world businesses can be defined as family firms, both in developed and emerging markets, and that family firms founded many of the largest international corporations of today. In the GCC, many family firms that began as small trading concerns have grown in to substantial diversified conglomerates owning retail, automotive, construction, shipping, insurance, agriculture, financial services, real estate and manufacturing businesses. They estimate that almost 80% of the GDP in the Gulf region, outside the oil sector, is generated by family businesses.
It is the vision of the founding member or partners and the values that they hold close to their chest which help businesses thrive and sustain their longevity. As newer generations of the families take over the reins of running these businesses it is important that they understand and build on this vision and uphold those values. Informal methods of transferring these to later generations are that erode sustainability.
Every successful family business inherits and continues to build its wealth. This wealth is in the form of:
• Financial Capital
• Family Governance Capital
• Human or Intellectual Capital and
• Social Capital
Just like successful businesses need formal, written documentation towards successful progress, families need to formalise steps towards Capital Preservation and business continuity.

 

 

insight

 

 

Family businesses are complex in that they involve family members who are involved in running the businesses and those who are not. These businesses employ professional, non-family, members in the business who would spend decades in their employment due to their alignment of values and vision with the family. It is important that goals are aligned too. This requires a formal roadmap, complete with strategies, agreements, risk management guidelines like conflict-resolution mechanisms and succession planning.

 
What do we offer?

 
We help the family business leaders and their family generate a strategic family plan with a clear and defined goal of trans-generational business continuity and preservation of wealth.
Our Family Business Advisory division offers solutions to entrepreneurs, multi-generational families that run business corporations, and ultra-high-net-worth families, on business continuity and wealth preservation.
With more than 100 years of commercial, investment, financial, business management experience among our senior partners we have been successful at problem-solving. Industry expertise and functional knowledge are acquired through hands-on experience. Our cross-functional experience helps us offer unique insights to family owned businesses and their promoters.
We have been trusted advisors to businesses and families. Longevity of our relationship with our clients has been built on our core values of integrity and empathy.
We believe that every family of business is different. Hence, a personalised approach to addressing the needs of these families and business is what we offer. From strategy to governance, inheritance to succession planning, family councils to family offices, our advisory team focuses on trans-generational business transition and wealth protection solutions.

 
Strategic Planning (Governance):

 
Our strategic planning services would include Preparation of a Family Constitution that would encompass, the founder’s Vision and the Values held close by founder and family. We would help incorporate the roles and responsibilities of members involved in the business, the share ownership and voting rights for multiple generations and Board representation. Succession Planning to align with the strategic goals of the business to match the founding Vision would help form guidelines for both family and non-family member employment at strategic and operational levels. One of the cornerstones of successful governance is periodic Family Meetings, which we can help plan and arrange. Family Councils and committees, Family office for financial wealth management, Philanthropy, NextGen education, orientation and development all fall in line sequentially, when we help the Family formalise governance.

 
Financial Wealth Management:

 
We advise families in helping strike a balance between wealth deployed in operating businesses and surplus wealth invested in traditional and alternative forms of investments run by professional wealth managers.
Our financial wealth management planning would help the Family draw guidelines on Investment Objectives of the Financial Wealth Preservation strategy. We help with an Investment Policy Statement that will have clear definitions of Investment Return objectives, analysis of risk-tolerance, stated constraints of liquidity, duration, taxation, legal jurisdictions and unique circumstances. The objectives will also Estate Planning of invested wealth. Asset Allocation, to match Investment Policy with risk-return ratio, for Strategic and Tactical investments would be defined. Manager selection process for managing traditional and alternate assets would be based on tested due-diligence guidelines. Investment reporting on underlying portfolio would be upon well-defined parameters.

 
NextGen Education, Orientation and Development:

 
In association with academicians of leading universities like Harvard Business School and Wharton Business School in the United States of America, INSEAD of France and University of St Gallen and IMD Business School in Switzerland, we offer specialised orientation and development programmes. Case Studies of how other families have managed situations have helped multiple generations of family businesses understand their requirements of skills enhancement.
Leadership and financial management workshops are tailor-made to suit family requirements.

 
Philanthropy & Community Development:

 
Most families give back to their society. In fact, most entrepreneurs are driven by their need to contribute to their people and society at large. To help them formalise the process, we help in the preparation of a strategic objective and plan. We would be able to help the family set up a Foundation for it to allocate resources for income-oriented investment activities to fund charitable and recurring expenses. We would also be able to help the family research and analyse charitable activities and organisations that suit its objectives.