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MARTYN GOWAR TEP IS A PARTNER AT McDERMOTT WILL & EMERY UK LLP AND AN EDITOR OF THE STEP JOURNAL


GLOBAL NEWS AND VIEWS Opinion


“The models are only as good as the strength of purpose that comes from where the control really is operated”


Diff erent agendas Martyn Gowar on the varieties of family offi ce leadership


D


o you remember that fallacy ‘All cows are animals, therefore all animals are cows’? I was musing about this the other day when I had two meetings with diff erent


family offi ces and was struck by the diff erence between them. In both cases, the wealth was similar, but in one there was a paterfamilias who was clearly the person setting the agenda, and the CEO of the family offi ce was there to take orders and implement the strategy that was laid down, both in terms of family politics and in terms of investment management. This CEO is a wise and thoughtful advisor and shrewd in matters of investment, and it was for his skills in that area that he was brought in. The other case was a family where the family business has been sold and there had been an agreement by the son and daughter of the founder that the funds would stay under central management because neither felt particularly comfortable with that amount of money being drip-fed out to the next generation. The son and daughter get on well, but they have families of diff erent sizes, and marriages and other arrangements are now falling into place, and there are signs of frustration about not being able to get their hands on the money. I think the son and daughter chose the head of the


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work themselves out. But it seems to me that the models are only as good as the strength of purpose that comes from where the control really is operated. In my fi rst example, the paterfamilias wields all the power and the CEO is there as a manager – and I say that with the greatest respect. In the second case, control is with the professional manager, and the family are falling in behind his vision. But it will not have escaped your


family offi ce to be the image of their strongminded but fair father, whose drive had led to the business being so successful. This CEO is certainly not a pushover, but he has a great drive and vision for what strength the family could derive from their assets. He is being an eff ective gatekeeper, and the young are beginning to learn how to appreciate him. Two similar models of a family offi ce,


two very diff erent ways they operate. I bet you could off er more types of approach, diff erent models of breaking up the responsibilities and diff erent timescales in which all these could


notice that, at some moment, the dynamic will change. The paterfamilias may die or become infi rm, and the professional manager will retire. At that stage, maybe you will tell me that there is a family document that will tell you what will happen next. However, I think that what is most important is the personal dynamic of the next leader, and the problem there is that it depends on who chooses that leader. And don’t get me wrong; I am not suggesting that the choice should be a replica of what has gone before. How often do you see the choice of leader (maybe in your professional fi rm) being made to supplement a shortcoming in the person replaced, because ‘enough is enough’? A manager to replace a visionary, or vice versa, is so often the choice. It is no diff erent from professional sport, where the captain or manager is rarely followed by the same success.


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