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It’s NOT about the Money

No Money bag sign icon. Dollar USD currency symbol. Red prohibition sign. Stop symbol. Vector

 

In some ways, this blog has been a long time coming. It feels like an obvious topic for me, I am almost surprised at myself for not having addressed it yet.

I am not sure what triggered it now, but here goes, let’s see if I can turn this question into something useful and entertaining.

Money has a huge impact on all of us, and working with business families and those in the UHNW space (Ultra High Net Worth) it is obviously top of mind much of the time. But for people who have a lot of money, is money all that they talk about, think about, and worry about?

 

What else is there to talk about?

In my experience, those who have plenty of money prefer to talk about other subjects. Maybe it is because they don’t have to worry about where their proverbial next meal is going to come from, or maybe it is because they are tired of listening to all the financial experts in their lives, who seem to talk about little else.

I arrived at this calling of working with enterprising families after a couple of decades managing a small family office that was created after a liquidity event in my family when I was in my twenties.

I quickly learned that when you are managing your family’s wealth, it is much better to lay low, or else you will become a target for anyone and everyone peddling their wonderful solutions to problems you never knew you had.

I guess one of the reasons I am writing about this now is that I have noticed an uptick in the number of these financial solution peddlers hitting me up lately. You see, when I decided to enter the world of family advising, it made much less sense for me to lay low, and in fact I needed to do a 180 and try to make a splash.

The curious thing is that these peddlers are contacting me repeatedly now, and I find very little compelling in what the vast majority is offering. For everyone who claims to offer something unique, I could literally find five to ten others offering something quite similar within a few block radius in any major city.

Before I look at how you plan to take care of any money that I might allocate to you, I need to feel comfortable with you and learn one whole heckuva lot more about you, and your firm, AND know that you have taken at least a bit of time trying to understand ME and my family.

 

Do I need ANOTHER financial solution provider?

Most families don’t need another financial solutions provider. They are almost literally available on every street corner.

Families who own significant wealth will more likely need help figuring out how to treat all family members fairly, whether they grew their assets by 5% last year or by 10%.

They will more likely appreciate help in deciding how to think about, plan, and communicate their legacy decisions, as they imagine how the things that they have worked for all of their lives will play out as the wealth gets transitioned to the next generation.

Oh, and that NextGen group? Yeah, well they probably have lots of questions for their parents too, not they they feel comfortable asking them. What kind of questions?

You know, the ones about fairness, controlling their own destiny, having a clear understanding of all of the “dreams and plans” that their parents have for them and their wealth, but that have not been discussed or written down anywhere.

If bragging about how your fund beat the S&P by 2 percent last year is what you wanna sell, good luck with that.

 

That Pie is pretty big!

Once the family pie reaches a certain size, making it bigger ceases to be the focus. Figuring out how to enjoy it as a family together over generations takes over as a priority.

Families have a pretty good idea of what they want to do, and why they want to do it. They usually need help with the HOW. The how involves family dynamics, and that can be a scary subject.

Can you help a family with that? If not, you better find someone who can.

 

 

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What Are You Leaving Them?

1yWhat are you leaving your Family - Curling Game

Just about every parent gets to a point in their life where they cannot help but think about just what they will be leaving their children when they die.

Among the things that they think about are both the tangible, like money, property and other valuables, and the intangible, like life lessons, values, unforgettable life experiences and a true sense of their family legacy.

“What” is not the only question that comes up of course, there is also “why” and “how”. And let’s not forget the sub-parts of “what”, like “when”, “where”, and “who”, but they’re well beyond the scope of one blog post.

The “why” and the “how” are pretty important to work out, because they are so often the root cause of family conflict afterwards, when children are unclear as to why their parents arranged things as they did.

When I ask these questions of parents, the “what” is the easiest place to start, and I always begin with the tangible stuff. We are not ignoring the important intangible things, just delaying them until we get a better handle on stuff that everyone can see and agree on.

I’ve always been a sports fan, and maybe even a bigger fan of analogies, and plenty of sports analogies come to mind on the topic of “what you are leaving”.

In rugby, when a team scores a “try” (similar to a touchdown in football), they get to kick a convert for more points, but unlike in football, the spot of the kick depends on where the player downed the ball in the end zone.

So if a player scores a try near the sideline, he (or his teammate) needs to attempt a much more difficult convert than if he scored in the middle of the end zone.

Moral: The details of what you leave definitely affect others and their likelihood of success.

In hockey, the difference between a good goaltender and a great one is often their ability to control rebounds. A good goalie stops the puck, a great goalie will not only stop the puck, but also make sure that it ends up in a location that makes it more difficult for the opposition to score on the rebound.

Moral: It is important to think not only about what you leave your loved ones, but also what you do NOT leave to others.

In billiards, a good player will sink the ball in the pocket, and then see what the next shot will be. A great player will plan her shot so that she leaves the cue ball in a good spot for her next shot, or at least not in a great spot for her opponent should she miss.

Moral: Sometimes you need to decide what to leave, without knowing what comes next.

In curling, you always know that your opponent will be throwing the next stone, and once again there is a huge difference between good players and great ones. Also, curling is the ultimate team sport.

A good team will make their shots and hope for the best with what happens next. A great team will always consider a number of things before even choosing which shot to attempt:

  • What is the score?
  • What are we trying to do with this rock?
  • What will the other team likely try with their next shot?
  • Where do we ideally want all of the rocks to be when they all come to a rest?
  • What happens if we miss, and how can we miss in a way that still gives us an OK result?
  • What are we planning to try on our next shot?

Moral: Complex decisions always entail a number of questions, and the best decisions come when the members of the team know each others’ abilities, trust each other, and have a clear idea of what they are trying to do together.

The curling analogy fits best for me, as each player contributes to each shot, and a great team needs to have great players and be well coached.

Your kids are part of your team, aren’t they?

Who is coaching your family?

 

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The Languages of Family Legacy

Foreign language study concept background - stack of dictionaries isolated on white background

Having grown up in Montreal, a bilingual city, has been a wonderful boon to me. But the daily exposure I have had to both French and English has some benefits that many local friends take for granted.

Starting first grade, my Dad had decided to send me to French school, for my own good, but mostly because he wanted me to be well prepared to take the reins of the business that he was building.

In my 20’s, I took a vacation to Mexico and felt really ignorant because I did not understand the language, so when I got back, I headed to the YMCA for Spanish courses.

Facility with language learning is not something everyone has to the same degree, but having exposure early in life certainly helps one have the confidence needed to learn a new language when needed.

So what does this have to do with family legacy, you ask? Let the analogies begin.

Dealing with your family legacy requires getting used to some new language, or at least some new vocabulary and new ways of expressing yourself, to develop common understanding.

Just like learning a new language, you don’t just decide to learn Spanish one day and become fluent the next.

These days there are new methods like Rosetta Stone that take advantage of technology and a better understanding of how people learn languages best, but let’s just break it down into some simple levels.

For many, reading a new language is the easiest way to begin to understand, because you can take your time and look at each word. Hearing people speak the words and understanding them in real time is more difficult.

To speak and be understood is again another level, and writing something coherent in an unfamiliar language is not advisable until you are much further along.

My point is that there is a progression through different levels, a need to move up gradually to develop a vocabulary, a comfort level, and the confidence to speak and use the new language.

In a family trying to preserve its legacy, to transition from one generation to the next, many important questions arise, like:

  • Who does the work
  • Who undertakes the leadership
  • Who keeps things on track

When families fall apart, it is almost always because somehow things fell through the cracks or people did not get along and agree. Often, nobody really ever understood and bought into the plans in the first place.

For the members of the rising generation to buy in, there are some things that are almost indispensable to have in place, to one degree or another.

The siblings (or cousins) need to share at least some level of financial fluency. Like a language, nobody just decides to learn it and gets there really quickly. But if a group of people is expected to work together on a big project, it helps if they all have a basic level of understanding of the subject being discussed.

But if basic financial fluency was all that was required, that could be remedied easily enough, assuming a willingness to learn.

The harder part is learning how to work together. The family interaction part is where so many plans go off track. Once again, a phased leaning process can help.

Let’s look at what makes people progress faster when learning a new language:

  • A teacher who knows the language AND how to teach it
  • Lots of opportunities to practice
  • The ability to give and accept feedback
  • A helpful, “can do” attitude of those learning together
  • A safe environment so nobody is afraid to make a mistake

Preserving a family legacy for future generations is no easy task, but if the people you are counting on to make sure it happens all speak the same language, it sure helps. If they helped each other learn it together, even better.

People can learn to work together, but first they must all be aware of just why it is so important for them to do so. Some basic family harmony is required, and unfortunately, it doesn’t usually happen all by itself.

Comprenez-vous?

 

 

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SFTU versus STFU

Fake Dictionary, Dictionary definition of the word understand.

The year 1989 was an important one for me, as it was the year that I quit smoking, and more importantly also the year that I first met my wife. If you ask her, had I not quit smoking, I would not be her husband today.

But 1989 was also the year that one of the most important books of the last 50 years came out, and I am sure that most of you will recognize it, and many of you will have read it as well.

I not only read The 7 Habits of Highly Effective People, but a few of those habits have become cornerstones of how I have tried to live my life ever since. I hope that this will not lead to an analysis of just how effective I have been, but I do want to share with you my favourite habit of the seven.

Now there are a couple of the habits that are more easily recalled than my favourite, because they have become part of our vocabulary, partly thanks to the success of the book, which sold over 25 million copies.

“Think Win-Win” and “Be Proactive” have become sayings that most people will have heard before, and “Put First Things First”, and “Synergize” are also kind of cool, but still not number one on my list.

Is it “Sharpen the Saw”, or “Begin with the End in Mind”? No, but I like those too. My favourite is habit number 5, “Seek First to Understand, and Then to Be Understood”.

I like to abbreviate things, so I will just call it Seek First to Understand, or SFTU. The first time that I jotted it down using just those four letters, I was struck by how closely it resembles another 4-letter acronym, STFU. For the uninitiated, STFU is short for “Shut the Hell Up”, or something close to that.

The reason that I found this so relevant is that STFU is actually almost the exact opposite of SFTU, especially in the arena of family business and family leadership.

The old fashioned, autocratic parenting style that many of us boomers lived through was very much “this is how things are going to be”, and if anyone dared to question Dad, we were often told, essentially, to STFU, and get in line.

Nowadays, thanks in some small part to the popularity of Covey’s book but also in large part to societal changes, people have mellowed somewhat, and active listening is actually something that many leaders are taught to do.

But Seek First to Understand is not just about listening, of course. Yes, you often need to listen, and watch and read, and interpret, but the goal here is understanding.

And please note that the habit is not called “Seek to Understand”, but Seek FIRST to understand.

That little nuance is the key, because that is where the leader needs to have the maturity to admit that they do not necessarily have all of the answers, that they have the curiosity to learn about the ideas and opinions of others, and have the courage to ask and listen to what others have to say.

Those who advise families in business who are hoping to transition their business, their wealth, and ultimately their legacy to the next generation will almost all agree that clear, frequent and open communication is an absolute necessity if you want to have any chance of success in this endeavour.

Obviously, I agree. The point of this blog is to remind people that good communication is predicated on the people communicating having the right attitude so that a true exchange of ideas can be had.

I love the old quote attributed to George Bernard Shaw, “The biggest problem with communication is the illusion that it occurred”. People assume that because they said something, the other person heard and understood them. They often go even one step further and assume that the person agreed!

Please try to Seek First to Understand, and Then to Be Understood. It will be well worth it. It is a habit, so that means that it can be learned.

And it sure beats the hell out of STFU!

 

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Simplifying Complexity and Ethical Wills

Writing Last Will and Testament. Closeup shot

A few weeks ago I came across a blog post by the Blunt Bean Counter on Ethical Wills that I liked, and I encourage anyone interested in this subject to check it out. Perhaps I can whet your appetite with my take on the subject here.

The man behind the blog and the website is Mark Goodfield, who is an accountant from Toronto. I would not necessarily call him an old friend of mine, but we did meet professionally last summer at a BDO SuccessCare course, “The Role of the Most Trusted Advisor”.

We spoke about blogging one day at lunch, and it was thanks to some of his comments that I undertook a rebranding and reworking of my online presence, for which the feedback I have been receiving from some of you has been gratifying.

An ethical will is essentially a letter that you write to your loved ones, outlining your wishes, which they can refer to and reread after you have passed away.

As Mark so nicely states, some examples of what people convey in an ethical will include:

  1. Your values
  1. Your hopes for your family
  1. An explanation of decisions made in your will
  1. Providing or asking for forgiveness

This is one of those ideas that seems to make so much sense to me, but that for many reasons is not as easy a sell as it appears on the surface.

It reminds me of Tom Deans’ great book, Willing Wisdom, in which he implores people to share the contents of their will with their beneficiaries. I get it, I love the idea, I encourage people to do so as well, but at the same time, I also know that he gets a whole heck of a lot of pushback whenever he gives a speech about the subject.

Now the title of this post mentions simplifying complexity, and that is where I want to go now, so please join me. This was its own separate blog post idea, but I often need to combine ideas because I seem to get way more than 52 ideas a year, and I vowed to keep these to once a week.

Whenever someone dies, the remaining family members are left to sort things out and move on. We have all heard stories about people who died without a will, or before ever having taken the time to put their proverbial affairs in order.

Let’s call that one “Simple Life, Complex Death”.

There is an alternative, but it takes some work, some foresight, and some courage. It’s all about doing the complex work up front, while you are still alive and of sound mind.

If you are willing to share the information about your decisions with your loved ones, you can make things as complex as you like. You do the hard work yourself, and then when you are gone, everything will be so much simpler for your family.

My father liked complexity more than most. He bought a farm as a retirement project, then bought more land from neighbours over time. When he was diagnosed with cancer, I feared that I would be stuck with the task of disposing of all these different acreages.

One of the greatest gifts he ever gave me was the fact that he sold the farm, in no less than four separate transactions to four different buyers before he died. All I had to do was go to the notary’s office four times to sign the papers and pick up the cheques.

But of course before doing any of that, we had a family meeting, during which we discussed whether or not we wanted to keep the farm in the family.

We knew what he wanted us to do after he died, because the day of his diagnosis, he went home and hand wrote a multipage letter to us, which I later dubbed his “manifesto”.

Little did I know it at the time, it was his Ethical Will.

During subsequent family meetings, we have referred to it often, mostly early on, less so now.

With Father’s Day around the corner, I wanted to say, “Thanks again Dad”.

 

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When your Greatest Desire is also your Greatest Fear

This week I was privileged to be invited to a lunchtime speech by David Lansky of the Family Business Consulting Group. Lansky is based in Chicago, but being a Montreal native, the good folks at Pembroke Private Wealth Management invited him to speak to their clients in Montreal and Toronto.

His presentation was entitled “Family Wealth Continuity”, and I went into it fully expecting to nod my head up and down throughout, and he did not disappoint. I am not a big “note taker” when I attend presentations, preferring to be fully attentive lest I miss something while I am jotting stuff down.

Occasionally though, someone will say something that I just have to write down, and then it almost always gets turned into a blog post.

So here is, from page 10 of his Powerpoint deck:

“What benefactors most want…they also most fear.”

Wow. I had never heard anyone put it that way. Let’s walk our way through this a bit.

People work hard to create wealth for their family. We all know many families who have done an extraordinary job of doing just that. We don’t often ask them why, because the answer seems so obvious.

They work for their wealth so that their family can be happy, have nice things, live in a safe place, go to nice places, have access to great healthcare, and lots of smiliar reasons.

They want their children to have a great life, and very often they don’t want their kids to have to work as hard as they did.

So far, so good. Somewhere along the way, though, especially in families who have done a really good job of creating more wealth than they could ever use in several lifetimes, some doubts creep in, and these parents start too worry about leaving their kids too much money

This brings back a memory of a great quote I recall from a CAFÉ Symposium a couple of years ago. Mike “Pinball” Clemons, a CFL Hall of Famer and winner of Grey Cups as both a player and head coach said, “Make sure that your family members are the beneficiaries of your family business, NOT its victims”.

Sometimes there is “too much wealth”, sometimes there are disputes between family members, sometimes both of these things are present, along with a host of other complicating factors.

Unfortunately, the fact that wealth can be a blessing or a curse will always be with us.

I have been running several questions through a model that I am working on to help explain and simplify things, and its basic elements are What, Why and How.

Allow me to try to demonstrate not only my thoughts on this important topic, but also use the three-stage model.

We start by looking at the What, i.e. what we are trying to do, in simple terms. We are trying to pass our wealth down to our children.

Now, we need to step back and ask ourselves Why we want to do this. So we talk about the things I mentioned off the top, having nice things, living in a nice place, making sure our kids don’t have to worry about money, etc.

Now comes the hard part, the How. At this point we have to look into the future and step forward and figure out all of the details around How we can do What we want to do, and have these details be aligned with the Why we want to do them.

My main point is that families can and do pass wealth down to their children without the fear that other families experience.

The major difference with the families who do that well and many others is that they are very careful with the How, and they take the time to talk with the entire family about the What, and the Why, and the How.

It is not always easy to have these critical conversations, but having them is what separates the successful families from the ones where the fear is justified.

It can be done, but it doesn’t just happen by itself. But then again, nothing important ever does.

 

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Putting the “Own” in Ownership

I am a big fan of the three-circle model and I have been since I first learned of its existence a few years ago.

As the story goes, it was actually derived from the two-circle model that preceded it, which was already groundbreaking in its own way because it was an attempt to separate the “family” and the “business” circles, while acknowledging their overlap.

When Renato Tagiuri and John Davis added “ownership” as the third circle, they had created a model that has stood the test of time for three decades now.

Ownership remains the circle that is hardest to grasp for many people, despite the fact that it sounds pretty straightforward on the surface.

People who do not have any relationship to a family business probably have a better grasp on the meaning of the word ownership, because anything that they own is likely pretty clear to them.

This week I attended an event where a woman from the third generation of a business family related that when she became an owner of her family’s business, she was not even informed until a year after the fact.

This reminded me of an event that I lived with my father many years ago. It was back in the 1980’s when CAFÉ was going strong in Montreal, and we attended a workshop together. In preparation, the organisers sent out a questionnaire to all attendees, asking for the percentage ownership in their family business.

My Dad had left this task to me, and I noted that he owned 67% of the company, and I owned 11%. He had set things up with two holdco’s, his, with 2/3 ownership, and his 3 children’s, with 1/3.

During the event, he saw the questionnaire that I had filled out for the first time, and he asked me point blank “What’s this?” I told him essentially what I just noted in the previous paragraph. “Oh, yeah, I guess you are right” was his reply.

Clearly he still considered himself the 100% owner, and I guess my sisters and I did too!

So ownership can be a little nebulous from time to time, and I know of at least one family business advisor who says that he only works with clients on ownership governance matters and avoids working with business founders, who so often have difficulty understanding the three circles.

A couple of weeks ago at the Family Business Summit in Halifax, I participated in an interactive exercise led by Doug Bolger of Learn2, who had the entire room working together and discussing succession matters.

At one point I had another “A-Ha moment”, and I always try to share those in this blog. We were discussing “ownership”, and then someone mentioned members of a younger generation wanting to do their “own” thing.

I had never realized that the word “own”, as in “my own” was part of the word “ownership”. I raised my hand and shared this realization with the group, and based on the reaction, I was not alone.

There is a new initiative being launched by the Business Family Foundation (BFF) this fall that recognizes that members of the rising generation in families seem to be more interested in doing their “own” thing more and more frequently these days.

They have created the “Initiative Intrapreneuriale” which will begin in Montreal in September, in French. As one of their “ambassadors” on this project, I would like to share why I think the idea behind this program is one “whose time has come”.

Intrapreneurship is not a new idea, many companies have benefitted from it, often without even calling it by this name.

What the BFF’s program is designed to do is to help spark business families into intrapreneurship as a way to get younger family members to join their family’s business AND do their own thing.

Enterprising families recognize that businesses have life cycles, and know about the importance of renewal. So why not encourage younger members to come up with their own business, and have it “grow up” within the existing family firm?

Sounds like a win-win proposition to me.

 

 

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“WHEN” you Sell your Business (not “IF”)

If you own a business, you may not ever think about selling it. But that doesn’t mean that you won’t. Sell it, I mean, not just think about selling it.

You may change your mind one day, and after looking at various options, decide to sell it. That actually happens more often than many people would imagine.

There is a whole other way of looking at this question, and I think it makes a lot of sense, and it also helps get a number of important discussions under way.

My colleague Grant Robinson, founder of the SuccessCare group that is now part of BDO, likes to put it quite forcefully, and he says it like this: “One Day you WILL sell”.

Let me say it a bit more crudely. When you are dead, you cannot own your business anymore. (It must be a law or something!)

Whether you like it or not, and even whether you know it or not, it is true. When you die, you actually “sell” everything you own, including that business you worked so many decades building.

If we know that we will sell one day, and we have no choice in the matter, well, why should we care? If we have NO choice, why bother worrying about it then?

Well, you may not have a choice over the question of “whether or not” you sell, but you sure have plenty of choices as to the HOW, the WHEN, the “to WHOM”, and especially the terms and conditions. “The terms and conditions are the most important part of any deal”, my Dad always said. (Yes, I was paying attention).

You can act like you will own your business “forever”, and as far as you are concerned “forever” and “until I die” may be synonymous. But aren’t the cemetaries full of people who thought the world would stop turning after they stopped breathing?

I trust that my point about not being able to own a business forever has been made. I hope you also noted the part about “the business you worked so many decades building”.

If you have children, you also likely spent many decades helping them “build” their lives. They are likely also the key people who will control your legacy after you are gone.

You have the option of continuing to work in your business, for the long term, as if you will own it forever. That is your right, and you would not be the first (or the last) person to go about your life and your business this way. For many, it is the only thing that they know how to do.

I would offer you another perspective. At some point, it usually makes sense to stop working IN your business, and start working ON your business. I am not claiming any original thought in this concept, books have been written about this.

At the same time, you may love the fact that you have built a great family business. Family businesses can be wonderful, and very often they are.

But have you ever looked at it from the perspective of the family, instead of always concentrating on the business? Do you realize the difference between a family business (where the noun is “business”) and a business family (where the noun is “family”)?

The subtitle (or secondary title) of my book, SHIFT your Family Business, is “Stop working IN your family business, Start working ON your business family”. The book came out in July 2014, and I have since looked for other ways to get the message across, but I think that it still resonates well.

If you stay the course, work on making the pie as big as possible, and get carried off to the morgue with your boots on, you will SELL your business on terms dictated by others, and it will be too late for you to have a say on any of the important Terms and Conditions.

There is a better way. You know there is. But only you can make that call.

 

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Do Differences Make a Difference in Family Business?

In any Family Business, and in any Business Family, there will always be a lot of agreement and “sameness” but also a great deal of difference. One of the keys to success is to make sure that any difference of opinion does not result in “irreconcilable differences”.

This topic came to me this week as I checked the discussion board of the Governance course that I am currently taking through the Family Firm Institute. There are about a dozen of us enrolled, as part of their Advanced Certificate in Family Business Advising (ACFBA) accreditation program.

Our instructor, Dennis Jaffe, asked us to share some thoughts on whatever topics we wanted to discuss, and I found a post from Krishnan Natarajan from India to be quite interesting. Now the fact that I met Krishnan a few months ago might have had something to do with the fact that his post grabbed my attention, but not necessarily.

Here is an edited version of what he posted:

Some of the family challenges that we face are as follows:

Addressing differences at an early stage. (Non-Alignment if not addressed leads to Differences; if not addressed leads to Conflict; if not addressed leads to Incompatibility)

I took the “extra” repeated words out to simplify it into a better visual, and came up with this:

Non-Alignement => Differences => Conflict => Incompatibility

I thought that it was a good representation of a spectrum, showing how things can flow from small issues, into much bigger ones, if they are not addressed early.

Rather than re-writing my thoughts, here is the cut’n’paste of what I wrote back to Krishnan on the discussion board:

“If you can align people, they will have less difference, less conflict and more compatibility.”

“Conversely, if you have incompatibility, it is likely rooted in some conflict, which, in order to sort through, you need to figure out where the differences come from. Once you find the root of the differences, hopefully you can re-align the people.”

“This is clearly a case of “an ounce of prevention” being far better than “a pound of cure”.”

“If you know you have differences, you can explain to the family the importance of resolving these before they become conflict, and where you have conflict, you can explain to the family the importance of figuring out their differences.”

After writing this on the board, it struck me that this model seemed so well thought out, that perhaps Krishnan had seen it or read it somewhere, and since I planned to write a blog about it, I figured I needed to verify this with him.

It seems that it just came to him during a discussion with a client, as he was attempting to convince them of the importance of dealing with their differences early on.

Allow me to add my customary advice here, about the importance of communication. If you are looking to get everyone aligned, and keep them aligned, it is imperative to keep them “in the loop”, so that they at least have the opportunity to hear what is going on, and why.

It helps, of course, if this communication is truly two-way communication, with the opportunity for questions and clarifications. People can become mis-aligned due to lack of communication about what is going on in the family and the business, but it can be just as bad if there is communication but it only flows in one direction.

If you find yourself in a situation where a family is not getting along, I think that this model at least gives the advisor a way of talking about the situation with the family in a way that clarifies just how far along the spectrum they are, and what areas they need to look into to find a resolution.

I know that I expect to refer to it again, and I will have my friend Krishnan to thank for it. Please feel free to use it yourself with your family or your clients.

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University Case Competition: Family Business Style

Last week the place to be was Burlington, Vermont.  I happened to be right in the thick of it for the first couple of days, and my experience was nothing but positive. So what was going on there that was so special?

For the third year in a row, the University of Vermont hosted the Global Family Enterprise Case Competition (#FECC15) at the Burlington Hilton and on their beautiful campus. It is the only competiton of its kind on the planet.

When they say “global”, they are not kidding either. While about half of the teams came from North America (including 4 from Canada and 2 from Mexico) there were competitors on hand from Europe, South America, Malaysia, Saudi Arabia and the UK, and I may have missed some.  Sixteen schools sent Undergraduate teams, and eight schools were represented in the Graduate league.

I have seen many business cases over the years, dozens during my undergrad and hundreds while doing my MBA, but I never read any cases like the ones used in this competition.  I was lucky enough to be a judge on the first two days, and I can say that the cases that the students had to present solutions for were like no business cases I had ever even imagined reading.

The competitors had a full seven days to prepare the first case, so they all had plenty of time to figure out what they were going to propose, how the were going to structure their presentations, and which teammates would be responsible for which sections.

The second and third cases, as well as the final on Saturday, were set up so that each team of three students would only have 4 hours from the time they received the case to the time they were required to present their viewpoints to a panel of “esteemed” judges.

But let me get back to the cases, because it can’t really be a family enterprise case competition if the cases are not situations that only a real family business would face.  I was only privy to the first two cases, but they were both fantastic examples of what successful family businesses face as they go from one generation of managers and owners to the next.

The first case was about a third-generation (G3) family who had been trying to write their family constitution for a few years already, without success, despite hiring a few consultants to help guide them. The four teams in the division that I was judging all came at their solutions in a different way.  Not only that, but each team brought up at least one issue that none of the other three had mentioned.

On day two, the teams were now faced with the time crunch of only having 4 hours to prepare, from the time they received the case until they had to begin their presentation.  But despite the fact that they had very little time, the solutions that I got to see and hear were quite remarkable.

This case involved a group of G4 siblings who were worried that their children (G5) were not showing enough interest in getting involved in the business. During the judges preparation meeting, I pointed out that the average age of the judges was likely close to the ages of the G4’s in the case, while the ages of the G5’s in the case was close to that of the competitors whose solutions we would be hearing.

It was a fantastic experience for me, as well as the judges that I worked with; I can only imagine how great the week was for those who came to compete.

The undergrad finalists included 3 Canadian schools and one from Chile, with Carleton U’s Sprott School of Business taking top spot in the final round over Dalhousie.  The winners of the Graduate section were from Jonkoping Unviversity of Sweden

I hope to take part again next year, at the 4th Annual FECC, in January, 2016.

 

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