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THE VISION


run out and the business fall apart? Families need to develop a solid succession plan.


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But, according to William Ahern, many people start at the wrong stage of this process: putting the focus on money rather than people. An Australian solicitor in Hong Kong, Mr Ahern


established Family Capital Conservation Limited in 2008 to focus on providing independent and strategic advice to families in complex tax, succession and legacy planning. It is well known that many family business


succession planning fails by the third generation. Some wealth managers report that only one third of the family businesses survive the transition to the second generation and only 12% on to the third. In Mr Ahern’s experience this failure is a result of


neglecting the family’s goals and objectives, which are the building blocks for the development of the succession plan. “Families are complex and when you add the


complications of modern business they become even more so,” he says. “When it comes to planning for the future and


protecting the family wealth, you can’t just make it about money. It has to be about people and take into account egos, ambition and personal feelings.” A lot of people can put together a well written will


or organize trusts, but when planning for the future, Mr Ahern says you must look beyond structural issues, such as taxation, trusts, accounting and legal considerations. “Too many people start with structural issues, but that isn’t the beginning. It isn’t where they should start,” he says. “Instead, before doing anything, families need to first


start thinking about what the wealth is for. What is the ultimate objective? This is the human side of succession planning.


“It is a laborious and time consuming process, but


it is absolutely necessary if families want to survive the transition process. “If this first step is overlooked, people will spend a lot


of time and money developing a transition plan that will almost always fail to reach the desired results.” Mr Ahern says families must ask themselves who


they are and what do they want as a family. They will then often write a mission statement then a charter. “Once you get all that done – and only when you get


that done – do you move on to the structural issues. The problem is that not enough people deal with the higher purpose,” says Mr Ahern. “The first generations often don’t think of the higher


purpose of what the wealth is for. They are too busy going into the factory to make the big bucks, but when crossing generations, it can’t be avoided.


It is well known that many family business succession planning fails by the third generation. Some wealth managers report that only one third of the family businesses survive the transition to the second generation and only 12% on to the third.


FAMILY OFFICE: THE FUTURE 37


lifetime of hard work. Building wealth and security for your family’s future. Now it’s time to pass on control to the next generation. But can you be confident that the money won’t


“The broad objective is to provide as many members


of the family as possible with the means of living the life they want to live. But what is that life, and how can it be achieved?” Answering this requires inter-family dialogue, starting with a discussion about whether members want to continue with the family business – and whether they want it to last. “There will no doubt be cultural and generational


issues, but these can be overcome if everyone enters the discussion with a true spirit of compromise, trust and loyalty,” Mr Ahern says. “The aim of this dialogue is to nut out shared goals,


then principles and rules deemed necessary to achieve these goals. “A trust is just a bunch of words – it’s not going to


solve problems. It won’t be the glue to keep the family together. “There will be members of the family who aren’t


going to be good in the business and others that just aren’t interested. This needs to be discussed from the beginning. If you don’t do this first – that is, sorting out the long-


term goals – there is a much higher chance that the short term goals will fail. Cracks will start to appear. “It sounds all touch-feely because it is,” Mr Ahern


says, adding that any generational issues will also arise during this process. In many cases, especially in the Asia region,


patriarchs run the business completely. “When he retires or passes away, the glue is gone.


Families find themselves without a guiding force,” says Mr Ahern. “The way family businesses are succeeded is changing. Traditionally, it has been very patrilineal, but once families start sending kids to universities in Australia or the USA, the next generation adopts Western ideas. “Putting someone at the head of the family business


becomes about finding the brightest kid, and that might not be the oldest son, it could be the youngest daughter. The old model no longer works for many families.”


THE VISION


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