- The Family Business: Planning for sustainable continuity
- February 23, 2011
- Law Firm: Morgan Morgan - Panamá Office
It is estimated that over 65% of any country’s business sector is made up of family businesses. Some of these companies have a concrete plan for their continuity. Most of the time, however, this plan does not constitute a guarantee of sustainable continuity, since at the time of drafting the plan, the main factor taken into account is the relationship between the founder and future generations, ignoring other management issues highly relevant to both the business and the family. For the development of an effective plan, all these other factors should be considered in order to make it better suited to the particular family’s needs and give the business the opportunity for development and growth throughout inter generational change processes.
A business family is a group of people united by blood, common legacy and origins, who share control and management of their own company. The company or firm is, at the same time, an essential part of their identity as a family. The founder and other immediate members of his family start the business with the intention and desire to maintain its continuity within the family’s hands from generation to generation. Doing this successfully involves accurate and far seeing planning to ensure that future generations carry on the business, not only in a successful manner, but also with the same family and business culture that the founders instituted as company values.
It is important that the controlling members of the business are able to harmonize the relationship between their family and their business. This must involve bringing up future generations with a sense of pride and belonging, preparing them to fulfill their primary role: generate wealth, protect their assets, and contribute to the stability and development of the company and the community where it operates. The transmission of these principles is not a task to be taken lightly. Instead, one must be prepared to convey this family lore in an organized and coordinated manner so that the rest of the company employees carry it forward once the generational change takes place.
This process involves the establishment of certain practices and institutions that create the necessary conditions to promote leadership, values, harmony, unity, commitment, shared vision, and the ability to resolve conflicts, among others.
The establishment of these practices requires the intervention of various professionals in each specialty so that the family and the company may move in unison towards the future. MMG Trust can assist you in establishing a plan of action to ensure that both the family and the company focus on maintaining harmony and development for the family and the business, respectively. We have specialists in areas such as legal, financial, administrative, inter alia, that will help your family and your company pre-establish rules of management and succession.
Among the issues to be considered in the development of the basis for a successful family business are family cohesion, generational change, the transmission of values, the establishment of a Board of Directors for the Business Family, and the establishment of a Family Office, to name a few.
The constitution of a Family Office is perhaps the most practical instrument that a business family can pursue. With this instrument the family members can reach, with an organize and structured manner, the preservation of its wealth and also the development of their human talent.