Aligning on owners’ intent
Defining a shared vision. Balancing multigenerational aspirations.
The complexities of family-owned businesses
Family-owned groups are complex by nature and things do not get easier over time. Assets multiply, generations grow, and objectives evolve.
Individual perspectives change, and collective purpose can become increasingly diffused and ill-defined.
Clarifying purpose, vision & values
In our experience, effective and harmonious joint ownership of assets requires alignment on three key questions:
Why do we want to own these assets collectively? What’s our shared Purpose?
What do we want to achieve together? What’s our Vision?
What’s important to us in how we get there? What are our Values?
Alignment on these vital questions creates the clarity required for the whole owner group to be decisive. It enables clear communication between family members and business or investment executives.
The consequences of misalignment
Without alignment, we often see families stuck in indecision or falling into conflict. This leads to missed commercial opportunities, frustrated executives, and erosion of value.
Families may have inherited complexity or found themselves managing a patchwork of assets acquired over time. In some cases, family members have split from the wider group and are facing these questions independently for the first time.
Whatever the starting point, the goal is to move from fragmentation to clarity; from reactive decisions to deliberate strategy.
Turning intent into a clear, actionable statement
A well-drafted statement of owners’ intent should address the financial, social and human capital a family has built up over time.
Key questions we seek to answer include:
Financial capital: Why do we own this set of assets? What are our expectations in terms of risks and returns?
Social capital: Are we about more than financial returns? How do we relate to our employees and the communities in which we live? How do we want to be viewed from the outside?
Human capital: What talent do we have in the family? How do we nurture it, deploy it and ensure it stays attracted to the assets we own? How do we complement our non-family talent? How do we ensure we can recruit the best?
Families should revisit these questions periodically and stakeholders should re-align on any changes.
The implications for business or investment strategy should then cascade downwards.
Establishing an Owners’ Board
A forum that safeguards purpose
Finding alignment when articulating and implementing an owners’ purpose is no trivial challenge – especially for multi-generational groups with numerous individual owners. That’s why we encourage our clients to carve out a space where current and future owners can come together to debate these questions.
This space is what we call the Owners’ Board, in which only family members have a vote. The Owners’ Board can delegate to other boards or investment committees. But no other group can hold the family’s assets to account against the guiding principles set out in the owners’ intent.
The Owners’ Board must be regularly briefed on the key issues facing the family, on asset performance, and on future strategic opportunities. In most cases, it will have delegated responsibility. As such, “watching the watchers” is its most important role.
Articulating the Owners’ mandate
The bridge from intent to implementation
After finding alignment on key principles, we bring those principles to life. We facilitate the information flows and discussions that were revealed to be necessary.
Elements of owner alignment are often captured in a shareholder agreement and complemented in a Family Constitution (or similar document). However, another document has standout importance: the “mandate”, which the Owners’ Board agrees to pass to the next layer down of governance bodies.
A clear mandate defines measurable outcomes
The clarity of this mandate is of strategic importance. It must communicate the owners’ intent (purpose, vision and values) as relevant to a particular business, investment portfolio or holding company board.
This document should include the overarching financial goals and guardrails, key parameters of risk, return and liquidity expectations, and the level of diversification expected.
The mandate must also be clear about the role of family in governance and businesses, and the expectations placed upon them.
In this way, it shapes the most strategic decisions. It turns the owners’ intent into outcomes that can be measured and tracked.
Family business succession
Staying together & passing on – or breaking up
In many geographies, owners have the flexibility to decide how they pass on their assets to successors. However, it’s not always natural for owners to come together and decide collectively – despite the impact such decisions have. In fact, it is rare to find a multi-generational family with privately held common assets that has up-to-date liquidity and exit policies.
Questions about how individuals or blocks can exit should be discussed well before there is demand for either. It’s also important to protect those that remain whilst being fair to those that exit.
The best time for succession planning is now. Aligning ahead of the game is key.
Who we are
Independent strategic advisors to Owners
Acanthite Partners is an independent, specialist advisory firm dedicated to addressing the unique situations faced by family-owned groups. Our mission is to help families make the right decisions for their business and investments and protect their legacies for future generations.
We create lasting solutions, enabled by decades of experience and an intimate understanding of family dynamics.
CLIENT STORY
Helping a family owner make the most of their own talent
A family in transition from fourth to fifth generation were seeking support in unlocking the potential of their own people. There was a sense that there were many capable next generation family members, but none were interested in helping the family business – and few had the knowledge and skills required to do so.
The situation stemmed from a decision taken by the previous generation to heavily restrict the opportunities for family members to work in operational roles. Over the course of a generation, the family had convinced its younger members to progress their careers elsewhere, leaving the impression that there was no pathway back to the family business.
With a critical leadership transition on the horizon, the family recognised the need for a new approach to re-engage the next generation and secure the long-term continuity of the business.
Perspectives
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