Wealth preservation strategies for family businesses

Wealth preservation strategies for family businesses

Wealthy families owning and managing businesses in the developed economies, have grappled with the issues of wealth not surviving the third generation much longer than their counterparts in emerging markets in Africa and Asia. They have long recognized, that wealth does not survive subsequent generations because of a combination of issues — from poor planning, a lack of values, to heirs who are not prepared for the windfall of their inheritance.
To address this problem, in the west, an industry has developed around advising the newly wealthy on how to ensure their legacy survives more than just a few generations. The advice involving a combination of the hard stuff — like structuring a trust, to control how the money is passed down and to prevent the money from being squandered at once — and the soft (but important) stuff, such as putting structures around the family and business to ensure effective communication and trust between family members and smooth successful transition in the business.
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In a recent interview, Paul Ouma a specialist and expert in family business succession and wealth preservation strategies, said successful business-owning families should structure their businesses (and families) well, to ensure that there is no infighting. “Professionalise the management of the family and the business, ensure policies exist to inform business and family decisions. “Differentiate business assets from personal assets,” he added. “The Incidences of family feuds, frivolous court battles, sibling rivalry, fights over wealth, and more… witnessed  in family-owned businesses, and which seem to recur with predictable frequency are avoidable.” he said.
Paul further indicates that  in Europe, the US, in Asia and Australia, there are a class of advisers known as Family Business Advisors, who help business owners think through their issues. “Someone has to help them put down all their issues and prioritise them. They need the kind of hand-holding now provided by Institute For Family Business (IFFB) .”
“It is only after they have resolved these issues that they go to a lawyer. “The lawyer comes at the end, when they, as a family have decided what they want to do,” he said. As this involves families, and putting in structures for the business, they need a family business adviser to get involved at the initial stages.   It involves putting structures in the governance, relationships and management of the family and business including raising financially literate children (who are, among other things, trained to delay gratification) and are gradually prepared to continue with the family vision. These advisers include investment managers, tax advisors, estate planning and management lawyers as well as mentors and coaches for the next generation.
Finally, it is important to have a legacy that is more than just about the money. This includes passing down the right values, prioritising harmony between family members and indeed increasingly we note that more wealth is lost through family feuds than extravagant habits. We recommend that families who own businesses attend the Family Business Learning Series (FBL Series).  
This is a series of short topic-based expert continuous learning briefings that combines Age-old Wisdom with Leading-edge current Family Business Management Skills.  The FBL Series, are designed to assist current and future family-owned business leaders develop deep insights, and acute judgement on “how to” manage family-owned business and in the process enable the wealth to transition for generations.
Does Your Family Business Need Help?
Institute For Family Business (IFFB), has extensive experience assisting family businesses. Through private family business advisory support services, Succession risk audits, specialized topic-focused sessions of Family Business Learning Series, IFFB continues to assist family-owned businesses in the region thrive from generation to generation.
For Information on how to attend the Family Business Learning Series: 
You can contact us on :  +(254) 722 259 855 or  +(254) 732 998 655 or email ; info@institutefamilybusiness.co.ke

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