Families in Business and Family Businesses Post Lockdown – What Now?

Welcome to our series of blogs, addressing post-lockdown issues from a legal perspective. This week we hear from our Family Enterprise specialists in our MLP Law Corporate and Commercial team.

After the turbulence over the past months and some businesses having fared better than others, the next few months and planning the medium to long term is crucial to all business. Particularly so for family businesses, to ensure they maintain balance and harmony within the family group as well as the business. This article considers the key issues family businesses should be considering as we come out of lockdown and progress through the year.

Key considerations:

How does everyone in the family feel, and have their perspectives on medium term goals and ambitions changed? Misaligned expectations are the common cause of disputes and tension, simply assuming people want to get ‘back to normal’ is a mistake. It is important to consider what the new normal looks and feels like for everyone in the family dynamic.

How do the senior management team in the business feel?  (everyone in the business is important, this article is considering the top level, board, shareholding and family aspects of post lockdown planning). What are their plans and have their perspectives and ambitions changed?

What are the short and medium term plans for the family owner managers?  Retirement, a willingness to lighten the grip on the reigns (and who takes hold) or earlier exit from the day to day running of the business are very possible outcomes as people reflect on the last 12 months.

We’ve been helping family enterprises for decades and, in particular over the last few years, helping manage transition within the business as roles and responsibilities shift as time passes. As we all know, your view, priorities and goals now are not necessarily going to be the same in 5 years, 10 years or longer.

Reviewing those changing dynamics now will set the business and family unit in good stead.

In particular, the family enterprise (how the family operates as distinct from the business) needs to consider how the roles in the business, in the family and around ownership and sharing the wealth generated by the business will change now, in 5 years and in the 10 years or more. There are a number of ways to do this successfully. We know that the most successful family enterprises adopt an open collaborative approach to the review, involving as many individuals as possible in the family dynamic. 

A successful review should explore the below, amongst other issues:

A consideration of those that may be looking to retire (and when).

Is the distribution of the wealth being generated in line with the family’s stated values?

Are the values and aims of the family enterprise still relevant or do they need to adapt to the new normal?

What are the likely roles for the younger generation in the business (if any) in the future and is there likely to be an appetite from them to take up these roles?

How will the family support the younger generation / young adults in the family in pursuing their future careers and endeavors?

These challenges and questions are not new, but the challenges thrown up over the last 12 months or so means that it is likely that everyone has or will reflect on and reset their values and goals, consider their futures against their values and seriously consider if what they are doing and going to do, truly aligns with their long-term goals and values.

Facilitating and enabling these discussions early on in an open and honest way with each other – their immediate family and wider family, in any business is crucial now as it has ever been.

We can help businesses and business owners address and facilitate those conversations. In particular:

Are the non-family senior managers in the business fully engaged and being rewarded and valued? If not, how do you address that?

Are there clear succession plans in place?

Is the distribution and share of the wealth generated fair and transparent (salary, dividend income, capital wealth)?

What is the timescale for the next transition of ownership and roles – family and business (whether retirement, through children taking senior roles, or younger generation being introduced into the business) What processes are in place to make that happen successfully?

When was last time the vision of values and any charter or constitution of the family enterprise was reviewed?

We can help with these and many other issues both inside and outside the business.

If you would like any help with the issues raised please contact our expert family business advisers on corporate@mlplaw.co.uk or 0161 926 9969. Click here for more information and to review your business’ vulnerability score.