We advise family owned businesses on family matters and on business matters. Family owned businesses have their own unique complexities. They need to understand and effectively manage the overlaps of three interrelated and dynamic systems: Family, Business and Ownership. As families in business transition from the founder-owner generation and become multi-generational their structures become more complex by nature of the growing number of family members, their expanded kinship with spouses, cousins and in-laws and their different personalities, interests and priorities in life and for the family business. Families who are serious about maintaining their legacy, long-term family unity and business continuity need to successfully manage these complexities on an ongoing basis.We advise family owned businesses on family matters and on business matters. Family owned businesses have their own unique complexities. They need to understand and effectively manage the overlaps of three interrelated and dynamic systems: Family, Business and Ownership. As families in business transition from the founder-owner generation and become multi-generational their structures become more complex by nature of the growing number of family members, their expanded kinship with spouses, cousins and in-laws and their different personalities, interests and priorities in life and for the family business. Families who are serious about maintaining their legacy, long-term family unity and business continuity need to successfully manage these complexities on an ongoing basis.ABOUT FAMILY BUSINESSES
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Around 75% of businesses in the world are family businesses, ranging from single small businesses to large multinational organizations. These businesses make substantial contributions to the economies where they operate.
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Family Businesses exhibit several strengths that often make them outperform non-family businesses on sales and profit growth. These strengths include high levels of commitment and loyalty, accumulation of business and market knowledge, resilience and fast decision-making.
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Yet, research indicates that only 30% of family businesses survive to the second generation of the family, 13% to the third generation and 3% beyond that.
Many of the reasons for this low survival rate are directly related to complexities in the family like sibling rivalry, succession planning issues and lack of strategic planning. -
In the earlier life cycle of family businesses it is often the case that the parent and offspring play three simultaneous roles as family members, owners and managers of the business. The overlap of these roles results in the movement of issues between the family-business-ownership systems, creating tensions and conflicts.
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As families grow they need to generate higher profits in the family business to sustain the lifestyles of the increasing family members. One study indicates that in the GCC countries such annual profit growth could be 18%.
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As the number of owners in a family business grows over the years the ownership shares that each family member holds in the business tend to become smaller; this can trigger conflicts between shareholders on ownership and dividend policies.
