Questions Family Businesses Need to Ask before Transition

June 2018 | Volume II

The questions below will help the ownership of a family business begin the transition process.
It is by no means the only tool that should be used, and should be seen as a starting point.
This questionnaire has been developed to be used in early meetings with family business
clients contemplating transition, and we find it to be an invaluable initial planning tool.
    • Are family members (especially children of the founding generation) entitled to ownership on transition due to:
    • Birthright; or
    • Active involvement in the family business.

    • What is your definition of active involvement?Will the offspring working in a non-managerial role be given as much of a stake as those in managerial roles?Do years of service matter?

    • Who will get a salary from the family business? And at what rate?

    • Who is, in fact, the family?
      • Direct (blood) descendants?
      • Adopted children?
      • Spouses? In-laws? Etc…

    • Who should work in the business?Only those qualified, or do you find a place for everyone, no matter what their talent and skill level?

    • When and how to get rid of an underperforming family member in the business? (known as “pruning the family tree”)

    • Should children be encouraged to attend university before contemplating joining the family business?

    • Should children work elsewhere before joining the family business?

    • Should there be a non-family member in a key management position?

    • Should there be a Family Counsel “chaired” by a non-family member?

    • Do you need a Family Business Constitution? This idea will be discussed in our next issue!

Please note that the information provided in this bulletin consists of general guidelines and that there are many exceptions and special cases that could apply.
If you want to know more about family businesses, how to manage tangible such as tax and estate planning
and the not so tangible family dynamics, please contact us or subscribe to our Newsletter.