One of the primary services provided by a family business advisor is family governance. The primary purpose of this is to establish a proper family structure. Family governance ensures that this developed family structure sustains even when more generations of the family join in the business. This structure, designed by experts in family governance determines how a family-owned business must function once more generations, or family members enter it.
In a large business family, people have conflicting opinions. In such cases, the family governance system helps with significant decisions. Hence it becomes essential to have the right family office to assist with the family governance to ensure the long-term success of the business and avoid internal conflicts within the family.
What does Family Governance Mean?
The authority in a business family comes under the founder and he is the one who takes critical decisions. But over time, as the business grows, more and more family members join in. Later the company passes down to the next generation, and the owner eventually has to share the authority at some point. During these times, there may arise difficulties in making decisions related to business.
The main aim of family governance is to determine how business decisions will be made once this situation arises. Therefore, it is not very suitable for public companies. But for family-owned businesses, this could serve as an essential step towards continuity of the business. The appropriate time to hire a family office advisor for family governance services is just before a new generation joins the company.
If you are the sole owner of the company and your child will be your only successor then succession planning is the more appropriate version for you. But if relatives jointly own the business and everyone has many successors, then family governance is necessary to avoid conflicts between the future generations.
The Complexity of Operating a Large Family Business
When more family members join in a business, conflicts may arise, and it may not be easy to make decisions. So, a clear decision-making structure needs to be laid down to tackle these situations. This includes decision-making processes as well as shareholding and communication aspects of the family members regarding the business. A multi-family office can deal with this. Excellent communication and a healthy relationship between family members is essential, especially in cases where a part of the shares is traded publicly.
The Main Components of Family Governance
One essential service provided by the family offices is helping the family in the governance of its finances. Family wealth management services help manage the family assets as well as preserving them to the extent.
These services include:
- Supporting the client in putting their family governance into place.
- Succession planning within the company.
- Providing support regarding legacy protection and setting up of family constitution.
- Organizing family retreats and family assemblies
- As family office advisors, we support you through family council meetings.
- Mentoring and coaching family members
- Our family advisory team provide special education according to the family member’s needs.
Three main components are –
1. A Family Constitution:
The basic principles of the business and the views and policies of the family are recorded in this.
2. A Family Council:
It represents all the family members regarding the business.
3. Family Assemblies:
They take place annually or twice a year. Information about the business, education of the younger generations, the company’s strategy, potential changes in ownership, etc. are discussed here.
The family governance services deal with all of this and even more situations. It is essential to choose a proper family business advisor that can provide suitable family governance services. Based on your needs, you can decide between a single-family office or a multi-family office. The family business advisor provides services including all of these aspects.
How Vedicolgy Advisors Support You
As a family business advisor, we provide all the services mentioned above. Our family business advisors team carefully examine and analyze the situation of the client’s family as well as the business and help them determine the best options for them. We provide our complete support with different aspects of the family business and help plan the business’s long-term growth. Our family office advisory team provide help with family governance and setting up a family office charter in place.