ANALY SIS
Denise Kenyon-Rouvinez, family business
professor at the Swiss-based IMD Global Family Business Center, says the principal of a family business is important because they often represent ownership, leadership, make decisions, and are the figurehead for both family members and employees. “[It is] impossible for us to be a family
office and think unemotionally about the issue of sudden loss or sudden death,” says Matthew Fleming, a partner and responsible for family governance and succession at Stonehage Fleming, the London-based multi family office for more than 250 families. “I think a lot depends on the time in the
person’s life when they disappear or die, and the real complexities arise when the event is wholly unexpected, and people think they all have more time than they actually do to articulate and agree the nuances of a succession plan,” he says. Yet many families are not prepared for
unexpected losses, Kenyon-Rouvinez says. “When that happens and you do not
have a plan in place and you do not have a leader, even if it is only an interim leader in place, people will feel that vacuum and then chaos will happen. “I have witnessed cases where families
who had never been involved in the business, but with all good intentions and good heart decided to get involved in the business after the loss of the founder and the result is that they lost the business completely,” says Kenyon-Rouvinez. In a family business the sudden and
expected death of a key figure will almost always send shockwaves through the whole system, Steve Legler, of the Montreal-based Family Legacy Advisors, says. But the business will usually have many
other layers of leadership and processes for others to move into leadership positions, and things can be relatively seamless, Legler says. “The ownership system, likewise, will
often have some structures and procedures in place for what happens to ownership shares and how they will transition to others, as per how things were spelled out in ownership agreements.
32
CAMPDENFB.COM Suzanne Greco, sister
of Subway co-founder Fred DeLuca, retired as chief executive in May this year
after more than 45 years with the restaurant chain. Greco became chief executive in 2015 after DeLuca died of
leukaemia. She reinvigorated the brand but did not have an ownership stake in the
company and faced resistance from business co-owners.
Dame Margaret Barbour joined the weatherproof
garment company Barbour only one month after the
sudden death of her husband in 1968. In the five decades since, she has turned it
into an international fashion label—favoured by festival
goers through to royalty. Her daughter, Helen, joins her at the helm.
and loss
Profit
“
The Duke of Westminster, Gerald Cavendish
Grosvenor, died of a heart
attack at the age of 64 in 2016. The sixth duke was Britain’s third richest man, worth an estimated £9 billion ($11.7 billion). He was succeeded in title and leadership of the family’s property group
Grosvenor by then 26-year-old Hugh (pictured).
When the head or
another prominent figure from the family passes away unexpectedly, other family members can find themselves on a ship that not only has the wind taken out of its sails, but is missing its map and compass
“The family circle can be the most
sensitive to this type of event, and families who have begun to work on their family governance will have an easier time working through these difficult stages, because they will already have some forums and agreements in place for what they are ‘supposed to do’. But that does not mean it will be easy, just a bit easier.”
Expecting the unexpected Grum says while it is difficult to prepare for every eventuality, there are many solutions for families looking to lay out a sudden succession plan. “Ideally these are not developed in a
vacuum by the principal alone, but will involve the wider family from the start to give them the best chance of success,” she says. “These will include practical aspects
about running the business and family office, immediate liquidity needs for the family, family office and business as well as more long-term aspirations and the legal succession of assets.” Fleming says family succession plans
must not only be well-drafted legally, but have had input from all the necessary family members so that they are understood and agreed. “The understanding bit is absolutely
critical, especially if you look in [the UK] where primogeniture is often in place for some of the families we might be privileged enough to support,” says Fleming.
PHOTOGRAPHY: PRESS ASSOCIATION, SHUTTERSTOCK
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