Family Governance: Strengthening your family business14.06.2021
Overview of Family Governance
The goal of a family governance framework is to establish a sustainable unique family structure that works for now and future generations. It defines the family’s vision and values, how the family operates with its businesses and other interests, how decisions are made and much more.
The larger the family, and the more complex its affairs, the greater the need for a formal family structure. This is particularly so from the third generation onwards. Of course, each family situation is unique and varies enormously – size of family, diversity of businesses and interests, geographical spread and the importance of inter-generational planning. And sometimes it also important to ensure that different branches of the family can operate relatively independently within an overall common framework.
The benefits of governance for the family include ensuring that the family functions well for the long term, preserving hard earned wealth, minimizing misunderstandings and tensions, and ensuring that the family remains in control for the long term benefit of the next generation.
Family Governance Framework
We work with each family to understand their history, their dreams and actively help to develop long term family vision and values, where appropriate.
Only then do we start defining the family structure, outlining how a family board should operate, helping the family decide whether an advisory council would be of benefit, implementing a decision making process, and ensuring that everything is done with full transparency and accountability.
Many families formalize this structure in the form of a “Family Constitution”. Some families like to summarise this in the form of a visual family roadmap.
We also help the family address the softer generational issues, including education and personal development, business involvement and succession planning around key business and family roles.
Finally, philanthropy is often a key component, too, where we can help families define where their philanthropic focus should be, what is the best structure for this and what the long term financial goals are.
Verona MFO’s support in practice
So, how do we approach a typical family governance assignment?
We work closely with the family to define the scope of the work, understand their overall goals and the sensitivities and bases on this set out a proposal. We then work closely with the family to complete this initial assignment in a timeframe that suits the family. We also provide on-going support to families, such as a periodic review of the governance framework. We are also happy to actively participate in parts of the governance arrangements where the family so desires.
The outcome of a family governance assignment will often include some or all of the following elements:
- An outline of the family history;
- A statement of the core family vision and values;
- A family operational framework setting out the modus operandi of the family, including board meetings, advisory council, operation of the family office etc;
- A strategic plan to guide the steps needed to achieve the long term vision;
- A thoughtful reflection on how best to organise family gatherings (often annual) and the form and content for these special events;
- Help in the establishment of a philanthropic foundation;
- Advice on potential structures and jurisdictions.
Why Verona MFO?
We have long and in-depth experience in helping families to find the best long-term solutions to meet their rational and emotional governance needs. In addition, we understand how important softer issues and sensitivities are for each family.
Verona MFO works closely with our expert colleagues elsewhere in Verona, and our carefully selected world-class partners, to provide the very best tailored governance framework for each family.