Succession 8 - FB business challenges & common mistakes

Question 1

Which are the 8 different family business challenges?

Answer 1

• Family squabbles, conflict between family and non-family employees
• succession planning
• who’s in charge?
• under qualified family members, balancing business needs and family loyalty
• family members privileges at work
• complex interaction between family and business
• management out of touch with business realities
• non-pecuniary goals

Question 2

Common family business mistakes? (8!)

Answer 2

• Promising the business
• Assuming taking over the business
• Not discussing and dealing with family secrets
• Not employing gamily business-specific governance practice
• Having professional advisors unfamiliar with family business dynamics/issues
• Not respecting and harnessing the vision, energy and creativity to the next generation
• Assuming the next generation wants to be in the family business
• Lack of professionalization

Question 3

Describe “All this will be your one day “

Answer 3

Promising business to the next without long-term planning

Question 4

Describe “All this will be mine one day”

Answer 4

• Assuming the business will be your because you are family and work in the business without getting clearer on what is expected of you and what plans the senior generation has in mind

Question 5

Which kind of family secrets should be dealt with?

Answer 5

• Addictions
• Intense family conflicts
• Inability of family member to handle their role in the business
• Favoritism
• G1 has no desire to see G2 take over

Question 6

Which three governance practices are family business specific? Describe them!

Answer 6

• Family council:
  Representative group of family members planning, creating policies, strengthening relationship between family and business.
• Family assembly/meeting:
  Larger and more inclusive than family council with a larger educational role
• Family constitution
  Written document that includes family vision and values and policies governing family members’ relationship to the business

Question 7

How can lack of professionalization in family business be defined?

Answer 7

One single entrepreneur

• high energy
• doing most of the work
• very informal environment (few or no policies and procedures)
• family and business lives mixed and hard to seperate

Question 8

What is shareholders agreement?

Answer 8

A shareholders’ agreement, also called a stockholders’ agreement, is an arrangement among a company’s shareholders that describes how the company should be operated and outlines shareholders’ rights and obligations. The agreement also includes information on the management of the company and privileges and protection of shareholders.

Question 9

What does a shareholders agreement contain?

Answer 9

There is no correct form of a shareholders agreement and the content will always depend on the circumstances and what the shareholders agree upon.

Shareholder funding/contributions. The shareholders' agreement should specify how the shareholders fund the acquisition of their shares. ... 
Director appointments. ... 
Management, obligations and information. ... 
Dividends and financing. ... 
Transfers of shares. ... 
Exit strategy. ... 
Default. ... 
Deadlocks and disputes.