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Would You Like to See the Menu, or the Recipe Book?

Advising family businesses is a growing field, as more people are recognizing what an important part they play in the economy, with all sorts of statistics being bandied about, from the percentage of GDP to the percentage of jobs that they are responsible for.

Still, the vast majority of those who advise these businesses continue to serve mostly the business circle, and not that many actually specialize in the issues that affect the family circle. I have spent about 95% of my life in the business circle, since I was raised to believe that it was the only one that mattered.

As a recent convert to the family circle, I can tell you that it is a very drastic change in perception, and not one that most people comprehend easily. I have committed myself to continue to “preach the gospel” about the importance of taking care of the family dynamics issues before they cause problems.

I had my A-Ha moment almost 2 years ago during the Family Enterpise Advisor course (www.ifea.ca). I first blogged about this in June 2013: https://stevelegler.com/three-circles-seven-sectors-one-a-ha-moment/

Today I want to talk about some of the difficulties I have had when trying to explain just how facilitators, coaches, and mediators like myself fit into the picture, especially when speaking to the advisors who already serve family businesses. In fact, one simple way is to say to them that while they serve the family business, we serve the business family.

Over lunch recently with a colleague who makes his living from selling insurance policies that are used in large and complex trusts for ultra-high-net-worth individuals, he explained to me that it would help me greatly to develop and explain my “process”, so that people like accountants and tax specialists could realize and understand how I add value to their services.

But last week during a similar lunchtime discussion, this time with someone who also works the process side of things (a business transition coach, but who does not typically work with families) I had no trouble getting him to understand my complaint that there is no “recipe” or exact set of steps to this work that can be laid out as “my process”.

I made the analogy of a baker versus a chef. Baking, from my limited experience, is a science, where not following the steps of the recipe exactly will almost surely result in a sub-optimal end result. Family business advising is much more like cooking; think soup, stew, or chili. It is much more of an art, with a variety of ingredients and quantities depeneding on the chef and the season.

A couple of days later, it hit me. It is not a recipe that I need to show people, because even pretending that there is a proper recipe would be wrong. A better analogy would be to show people the menu.

When someone comes into a restaurant, they almost always look at the menu, and rarely ask to see the recipe book. And so it should be for family business advisors.

Then I took it a step or two further. Some restaurants have menus that are so extensive that they actually offer too many choices. What might be even better is a kind of “lunchtime special” menu, where you get a soup or a salad, a choice of 10 main courses, and a cup of coffee.

I know that there are others in this space that may be struggling with getting their message heard in a productive way, and I am a big believer in helping to make the pie bigger.

I want to continue to get the message out to people who work with business families that they not simply assume that the family issues will just take care of themselves, and that the only key client is the business.

The need is huge, even if it has not yet manifested itself as a huge demand. Nobody can “corner the market”, but we can help to grow the demand, by continuing to spread the message.

Would you care to see my lunch specials? Stay tuned.

 

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A Will Outlines the “What”, But Not the “How”

Most people will agree that it is very important for everyone to have a will, and some will go so far as to remind you of the importance of keeping that crucial document up to date.

That is all very well and good, but in my books it is not nearly sufficient. Of course if you still do not have a will, I encourage you to take care of this deficiency ASAP.

By the same token, if you DO have a will, but you have not looked at it or updated it in the last few years, please pull it out and see if it all still makes sense with the reality of your family today.

Regular readers of this blog will know that I have a penchant for analogies, and for this subject I believe I have come up with one that is very à propos.

While it does not lend itself to a good blog title or soundbite, it is nonetheless very important to understand.

Here goes: A will is like a law. Your will tells your heirs what happens to all your assets and possessions. Similarly, a law is a document that describes what is allowed and what is legal, and what is not allowed and illegal.

But laws are written in general terms, and then the laws get turned into regulations. There are people who work for the various governments and departments, whose job it is to turn the laws into rules and regulations, and it is these rules and regulations, not the laws, that are the key to how the laws impact the day-to-day lives of citizens.

So if a will is like a law, and a law depends on its regulations, what does the will depend on? I’m glad you asked!

The lawyer who prepared the will can help the family understand what the will means legally, insofar as who now owns what. A good lawyer, who took the time to get to know and understand his or her client’s wishes and intentions, may even be able to help the family understand WHY things were laid out a certain way.

But I don’t know too many lawyers who will be able to help the family figure out HOW they are going to get along and manage things in the future, now that the dearly departed has actually departed.

Imagine if there were a way that you could help your family work through the questions of HOW they are going to work together after you are gone. Wait, why are you just imagining it, why aren’t you actually doing it?

Now I am not suggesting that this is the kind of discussion that everyone loves to have, far from it. But it is too important to ignore it.

Best-selling author Tom Deans’ second book, Willing Wisdom, gives some very thought-provoking advice, sugesting that everyone review their will annually, and modify the document as needed after having a collaborative discussion with their entire family.

I love the idea, but I acknowledge that it is probably a little extreme for most people. But talking about sex never got anyone pregnant, so talking about death isn’t going to kill you either.

My main point is this: Having an up-to-date will is the bare minimum. The people who are going to have to deal with your assets, and who are going to have to deal with each other, would benefit enormously from understanding not only WHAT you have written in your will, but also WHY you have made the choices that you did.

And furthermore, if you can get them to also comprehend HOW you would like them to work with each other, they could all take advantage of your wisdom, even after you are gone.

The hardest part is getting the conversation started, but the sooner you do, the easier it gets.

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It’s Hip to Be Square, Right?

When I turned 50 recently, I vowed not to wear a tie again, with the possible exceptions of attending a wedding or a funeral. Thankfully I have not been to either since, so I haven’t had to make that call.

The open neck look now seems to be more prevalent than wearing a tie, at least from my observations.

During my childhood, my father always wore a tie to work, and when I started working in the office full time, I too wore one daily.

One day we were walking to a nearby restaurant for lunch, and a local kid came by on his bike and asked us if we were detectives. I guess to him we looked the part based on what he saw on TV.

When I was kid, my parents sometimes gave my grandfather a tie as a gift. But he had never worked a white-collar job, and I found it funny that my father always had to tie the tie for him, and he would hang it up and keep it tied for the occasions when he needed to spiff himself up.

I don’t miss looking like a cop, and I never wore a bow tie either, with the exception of a photo I recall seeing of myself when I was about 4 years old, but in that picture I was also wearing a red blazer, so I was obviously not the one who picked the outfit.

Without a tie, though, what could I use instead to add at least a modicum of pizzazz to my wardbrobe? Enter the pocket square. As Huey Lewis told us all those years ago (1986, wow, that long, yes, I checked!), It’s Hip to be Square.

So I now have a small inventory of pocket squares of various colours and patterns, but far from the tie inventory that I had amassed. But with time, it may get there.

One of the things I like about the pocket square thing is the name, pocket square. It must go back to my Dad again, because as far as he was concerned, to be square was a supreme compliment, it was the opposite of crooked.

“That Bob is a real square guy” would be about the nicest thing he could say about someone. That’s not to say that he rarely paid anyone a compliment, just to emphasize how important squareness was to him.

Now I’ve stated that I like the whole pocket square idea, but it has raised some questions on what is OK and what isn’t with respect to wearing one. I have never been a fashion junkie, I have usually been content to find clothes that fit me and that don’t clash.

I like the fact that there are some alternatives to how you wear the square. Some guys go with the ironed square, where it looks pressed and it forms a perfect thin rectangle above the pocket line. It’s a classy look, but really not my style.

I prefer more of a freestyle look, but I am not sure if all of the variations that I have been trying are cool. I am getting more adventurous, with different ways of folding the thing so that a few triangles stick out, or just kind of fluffing it up and shoving it in however it comes out. It all seems pretty random sometimes.

Or is it okay to fasten it in place with some tape or pins inside the pocket, after all that work to get it to look just right?

One conclusion that I have come to, is that guys who wear both a pocket square AND a tie are probably trying too hard, but maybe that’s just me.

Of course, this is coming from a guy who has been spotted on more than one dance floor with a tie around his head. But never again, since I don’t do the tie thing anymore. I’m a square guy now, and I think my Dad would be proud.

 

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“Family Business” Versus “Family Wealth”

The area of family business advising is considered by some to be a niche market, since there are not that many of us who hold ourselves out as specialists in the field. Family wealth, by contrast, seems to be a much more crowded area, perhaps because so many huge institutional players are involved in the area of wealth management.

Today I want to look at some of the similarities and some of the differences, and even throw in a couple of other terms to discuss variations of the two.

At its most basic level, the key difference is usually about the existence or absence of an operating business. When a family owns and operates a business, with facilities, employees, and the sale of goods and services, we would usually call it a family business.

In the case where a family has a good deal of wealth, but that wealth is mostly in the form of financial assets, and typically of the more liquid variety, we tend to describe them as families of wealth. There are even terms like high net worth individuals (HNWI) and ultra high net worth individuals (UHNWI) depending on whether they have $10 MM or $500 MM, for example.

There are plenty of families who do not fit so neatly into one category or the other, of course, as some are successful in exiting one line of business and turning that portion to liquid wealth, while maintaining another active operating company. Or a family may take some of its liquid wealth and invest in starting or buying another business.

What these families all have in common, though, is that the decisions that they make do not only affect their company or their money, but also many members of their family. When it comes time to think about how the business or the wealth will go from the parents’ generation to their kids, and then the grandchildren, there are many areas that can get tricky.

The Family Firm Institute, a global organisation based in Boston, offers courses and certification for those who advise these kinds of families. I recently completed the initial level of the Certificate in Family Business Advising (CBFA) as well as the Certificate in Family Wealth Advising (CFWA).

I will be doing their course on Family Governance beginning in January, as it is a requirement for both of the advanced versions of those certificates (ACFBA and ACFWA). Many of the courses for these certificates in Family Business and Family Wealth advising apply to both.

In Canada, IFEA, the Institute of Family Enterprise Advisors, offers the designation “FEA”, where they use the word “Enterprise” as more of a catch all, encompassing both business and wealth, because of the many similarities and the difficulty in labelling these families.

Much of the research in this area is currenlty focused on the area of entrepreneurialism, and creating “enterprising families”, which is often required to keep the assets of the family growing as quickly as the number of family members increases geometrically with each generation.

Tom Davidow, a veteran of this field and head of his eponymous advsiory firm, makes special mention of Real Estate families on his website, as he notes that they have many of the traits from the wealth realm but also an operations component and some tricky tax issues due to the way these assets are often owned.

I met Davidow this week at a conference for Family Offices, which is yet another term that is not always well understood, but which often operates at the intersection of family business and family wealth.

A family office is typically set up to handle the needs of one family (single family office, or SFO) or the needs of several families (multi-family office, or MFO), and can have anywhere from one employee to dozens of staff.

There are many names and not always a lot of agreement about what they mean. But when a family owns a large quantity of assets, that are destined to be kept in the family over coming generations, it is important to remember that the “family stuff” doesn’t always just take care of itself.

 

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La Traduction Non-Simultanée

J’ai pris la décision récemment de faire traduire mon livre en français, et j’ose dire que je le fait “à la demande populaire”. Peut-être que j’exagère un petit peu là-dessus, mais nous verrons avec le temps.

Quand quelqu’un me décrit comme étant “parfaitement bilingue”, je ne suis pas d’accord, puisque je suis très conscient de mes limites en français. Oui, j’écris parfois des blogues en français, moi-même, tout seul, mais je ne les publierai jamais sans les faire réviser par quelqu’un d’autre avant de peser sur le piton “publish”.

C’est ma fille qui me rend ce service, et elle le fait avec plaisir, surtout depuis que je lui offre $2 pour chaque erreur qu’elle trouve et corrige. Elle n’est pas encore rendue riche, mais disons que j’ai déjà écrit quelques blogues qui m’ont coûté chers, à cause de mon inattention aux règles de grammaire que j’avais pourtant apprises au primaire à l’École St-Rémi dans les années 70.

Mais c’est une réalité qu’au Québec, avoir son livre en anglais, mais de ne pas avoir une version française, ce n’est pas idéal. J’hésitais de le traduire dès le début pour diverses raisons, incluant le coût de la traduction, la question de la distribution au Québec, et surtout la complexité de traduire le titre et les noms des chapitres clés.

Le titre anglais est “SHIFT your Family Business”, où les lettres du mot “SHIFT” sont un acronyme basé sur les mots Start, Help, Invest, Flexible et Talk.

Je n’ai aucune idée comment traduire tout cela de façon claire et précise, tout en créant quelque chose qui sonne bien et qui a de l’allure.

J’ai octroyé le contrat de traduction à une professionelle du domaine et je me fie sur elle. Une semaine après lui avoir donné le projet, je lui ai posé la question sur ses idées pour le titre, et elle m’a répondu qu’elle préfèrait attendre d’avoir complété le travail, pour bien comprendre l’étendue de mon message, avant de le baptiser.

J’ai trouvé sa réponse géniale; mais j’ai tellement hâte de voir comment nous allons l’appeller!

Retournant maintenant sur le titre du blogue, je procède aussi à la traduction non-simultanée de mon site web, de mes cartes d’affaires, etc.

La tâche de développer son identité et de faire son “branding” professionel est très important pour le marketing de services, donc j’ai décidé de faire ces démarches dans ma langue maternelle en premier.

Il y a un certain temps, je regardais la nécessité de faire traduire tout mes outils de marketing en français d’un point de vue négatif, comme un mal nécessaire. Avec le temps, et avec un peu de réflection, (et en parlant avec de plus en plus de gens francophones) je le vois d’un autre oeil.

Même si j’admets de ne pas être “parfaitement” bilingue, je suis facilement “assez” bilingue pour rendre mes services dans les deux langues. Et il n’y a aucun point négatif là. Si ceci n’est pas un atout, je ne sais pas qu’est-ce qui se qualifie comme étant un atout.

Ce blogue tire bientôt à sa fin, et je n’ai pas encore essayé d’y attacher un angle “entreprise familiale”, à part le fait de payer ma fille pour ses talents de rédactrice.

Allons-y avec celui-ci: Un entrepreneur qui bâti une entreprise a souvent tous les talents nécessaires pour créer quelque chose de valeur pour sa famille, mais il a parfois de la difficulté à TRADUIRE ses efforts de façon que ses enfants, et ses petits-enfants, pourront continuer à en bénéficier.

En cas d’urgence, j’aurais pu traduire moi-même mon livre. Mais je connais mes limites, et j’ai décidé d’engager une professionelle, une spécialiste, qui connait ce métier beaucoup mieux que moi. Au bout de la ligne, le résultat sera sûrement plus satisfaisant.

NDLR: ce blogue a coûté à mon père 14$.

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Striving for a Succession Non-Event

This week’s blog is inspired by a quote that I came across on Twitter a couple of weeks ago. It was tweeted out by the Business Families Foundation, but ironically it does not come from someone in a family business.

It comes from Anne Mulcahy, the former head of Xerox, who Chief Executive magazine named CEO of the year in 2008. Without further ado, here is what she said:

“One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective, so that it’s almost a non-event when it happens”.

There is so much that I love about this quote, so let’s get started and see if I can share all the reasons that I love it. To simplify the task, I will break it up into four parts.

One of the things we often miss in succession planning

–      There are MANY things that get missed in succession planning;

–      Things are OFTEN missed;

–      Succession planning happens in ALL businesses, not just family businesses.

 is that it should be gradual and thoughtful,

–      GRADUAL is preferred, versus all at once;

–      Before doing it, lots of THOUGHT should go into how it will be done.

with lots of sharing of information and knowledge and perspective

–      LOTS of sharing is better than just a little bit;

–      Sharing of INFORMATION is important, but it is not the only thing;

–      KNOWLEDGE must also be shared, and that is NOT the same as information (i.e. not just WHAT, but WHY and HOW);

–      PERSPECTIVE sharing is also important, and this implies listening to the points of view of,

and getting input from, MANY parties.

so that it’s almost a non-event when it happens.

–      What do we hope the result will be? Almost a NON-EVENT. Nobody should really notice when it happens.

Allow me to digress to make a key point here. As a kid I remember seeing a “Under New Administration” sign at a local business, likely a restaurant, and I asked my Dad why they would put up such a sign.

I don’t recall his exact explanation, but it’s not important, because everyone reading this understands what those signs are meant to convey.

But when you are planning for the succession of your family business, I daresay that you would prefer NOT to emphasize that there is someone new in charge of the place.

It is still the same family running the place and it is just as good as it has always been, maybe even better.

I had lunch recently with a friend who also grew up working for his father, and we talked about how his Dad still used to come in to the office every day for many years after handing over control to his sons.

I mentioned that he was lucky that his father was the type who could let go and let the next generation run things, as this is not always the case. In fact, when I first started dealing with their company, I am pretty sure the father was still nominally in charge of things.

But I can honestly say that I am not sure when my friend “officially” succeeded his father. It eventually became clear that the younger generation was in charge, but I still saw Dad there almost every time I visited.

They seem to have created the Non-Event Succession, and good for them. Some people are more naturally inclined to be good delegators, good teachers, good parents.

Gradual, thoughtful sharing of information, knowledge and perspective. You do not have to have read Mulcahy’s quote to do it well, far from it.

But if you know people who are struggling with their succession issues and you can only give them one quote to help guide them, you can start with Mulcahy’s.

But why limit yourself to just the quote? Please feel free to share this blog post with them too!

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Family Business Advising: Art vs. Science

The professionals who provide services to family businesses come from a variety of fields, but even so, most of them have a lot in common. Whether they are accountants, lawyers, tax specialists, wealth managers or insurance specialists, they typically deal with business and financial issues.

If we are talking about family businesses, why aren’t there any who deal with the family? The truth is that there are some people who specialize in the family circle, but not nearly as many professionals who advise the business and ownership circles.

The field of family business advising as a sub-specialty of business advising is relatively new, but it is growing and slowly being recognized as an important area. Most people can quickly see that there are lots of business issues that affect the family, but fewer have actually thought about the fact that there are family issues that affect the business too.

The people whose serve the family side of things more than the business side have a number of obstacles to overcome; let’s look at some of them, in no particular order.

Content vs Process

A lawyer will prepare a shareholders agreement, an accountant will prepare a set of financial statements and a wealth manager will make an investment for you. They are all discrete transactions, all of them are tangible; each is one piece of content.

Facilitating family meetings, mediating a dispute between siblings, or helping bring a family together to work on their values, vision and goals, for their part, are more process related. These functions can be very important for long-term family business success, and as such, they are often longer term in nature.

Transaction vs Relationship

The content pieces I mentioned above are typically done as separate transactions. Yes, relationships are also important to work on for accountants and lawyers, but in the family realm, it is almost all about the relationship, and the advisor needs to develop a good working relationship with everyone, not just the person who signs the cheques.

Soft vs Hard

Some people like to talk about hard skills versus soft skills, and I suppose that is one way of looking at it, but let’s not forget that the “soft” stuff is often actually much HARDER to deal with. Few of those who work on the transactions are trained to deal with these soft issues, and many families don’t want to talk about their family problems with those who charge them several hundred dollars an hour.

Business is about $$$ vs Family is about Love

Business is usually very much about making money and creating wealth, while family is all about love. It is the head versus the heart, and they do not necessarily always agree.

The advisor who can show you how his tax strategy can save you $XX,000.00 has an easier sale than the one who tells you that he can help make sure that your family has conflict-free Thanksgiving dinners in the future. How much is that worth?

Art vs Science

What it comes down to in many ways is that it is an art to deal with the family, while dealing with the business is more of a science. To be a good family business advisor, you need to be able to bridge both of these, art AND science.

There are some family therapists who help families deal with conflict, but very few of them understand anything about business, so it is hard for them to provide that bridge.

I have come up with an analogy, but I am not sure how good it is, but here goes.

Paint-by-Numbers

When I was a kid, I did a few paint by numbers, and while it felt like I was an artist, I was just filling in spaces with pre-decided colours of paint, which is more like science.

We need to be able to show our client families the canvas with the outlines of what we can do, and tell them what colour we can help them put in which spaces. This way, they will better understand what we can do for them, in a way that helps them see the value we can bring.

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R.I.P. my Old Friend

As much as I struggled to find the right title for this blog post, I know that I will likely struggle more writing it, as the tears are already welling up in my eyes just contemplating the topic.

Thankfully, this writing is actually a bit therapeutic for me.

Bosco was a Golden Retriever who had been with us for the past 8 and-a-half years, after spending his first two years with another family, who unfortunately went through a divorce. It was unfortunate for them, since they could not agree on who got to keep him, but very lucky for us.

Our kids were just 5 and 6 at the time, so it is no exaggeration to say that he has been a part of most of their childhood family memories, with the series of annual Christmas photos as a reminder of how they grew up as he grew old.

He had slowed down considerably over the years, but still seemed to be in decent health considering his sedentary lifestyle and his propensity to hang around the kitchen, you know, just in case some food happened to fall on the floor.

But on Wednesday this week, my wife was out of town and I was at an event downtown. The kids were at home with the pets (Bosco plus another dog and 3 cats), and things went bad unexpectedly and quickly.

My daughter texted me around 5 PM saying something was wrong with Bosco, so I called her to see what was up. Difficulty breathing, and inability to even stand up, hmmm, I thought, I better head home quickly.

By the time I got to my car not even 10 minutes later, she texted me to say that she feared the worst. I got home and sadly realized that she was right. Sad enough to have an old friend pass away, but sadder still that it happened in front of my kids, without their parents there.

My son helped me load him into the car for one final trip to the vet, where we said goodbye one last time, and we both cried all the way home.

After sleeping on it a few nights, I am very thankful for the quickness with which he scheduled his ultimate departure, if not the exact timing. How many stories have you heard about people whose pets get sick, and they then have to make choices between expensive veterinary procedures and letting nature take its course.

I will now try to carefully draw a parallel between the case of a pet and that of a parent. I say “carefully” because I recall an instance when my aunt passed away, and my father suggested to her widower husband that he get a dog.

Dad was making what he felt was a constructive suggestion to help his brother-in-law through some of the grief and loneliness, but I know that some people took it wrongly, as if he was suggesting that my aunt could be “replaced” by a dog.

The story I wish to convey is about my Dad, and how he left us relatively early, yet not so quickly as to leave us scrambling.

My mother recently related to me that when she and my Dad used to go and visit his mother during her long battle with Alzheimers, on the drive home, Dad always said to her, “If I ever get like that, please shoot me”.

The cancer saved us from having to go through that, and Bosco’s passing, also likely from cancer, saved us a lot of tough times and extra heartache.

And the title for this blog? I borrowed it from my 13-year-old daughter’s Facebook post about the loss of her “old friend”.

Sometimes sad events allow us to appreciate how quickly our kids have matured while we were paying attention to other things.

Goodbye Bosco. It is better to have loved you and lost you, than to never have loved you at all.

 

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Solid Wealth Vs. Liquid Wealth.

While in Philadelphia with my teenage son this past summer, we visited the Franklin Institute and checked out some of their great science exhibits. They have a huge variety of things to see, as well as some live demos scheduled throughout each day.

I always make sure that we come up with some kind of a plan to see the most important stuff in some kind of a coherent fashion, and the last demo we saw really stuck with me.

It was about the changing nature of water through a range of temperatures, from ice to water, and then from water to steam. The guy doing the demo was the same man we had seen earlier in the day showing kids some cool stuff involving liquid nitrogen, and we both enjoyed his way of getting the little kids into it, and garnering a lot of laughs along the way.

I can’t say that either of us actualy learned anything new, but for some reason an important analogy popped into my head. As usual for me, the only way to do it justice is to write a blog about it.

Of course the ice-to-water-to-steam concept also applies to many other forms of matter, but I started thinking about how it applies to wealth, and more specifically family business wealth.

An established business, that is profitable and well run, represents a form of wealth that most people consider solid. When a family owns such a business, they often try to find the best way to pass this solid wealth on to future generations, as they see the value and potential permanence of the wealth that it holds.

Passing a business from one generation is often quite tricky, as the statistics surely bear out, but the stories of those that succeed are an inspiration to those who are attempting a similar feat.

In many cases, and for many reasons, passing the wealth down in the solid form of a business is not possible or practical. In many of these instances, the business is sold off to others instead, in what is often dubbed a “liquidity event”. How convenient for my analogy, that the wealth has gone from solid to liquid.

Liquid wealth has its own pros and cons, of course. The biggest advantage is the flexibility that it affords its owners, especially as far as diversification and asset allocation are concerned. Sounds great, so what are the cons?

My simplest reply is that the business, much like real estate, is viewed as solid, especially by the expected heirs, who expect to benefit from the profits, income and/or dividends it throws off, but very few members of the next generation ever consider the idea of selling pieces off in order to get their hands on the wealth.

Going back to the ice-water-steam analogy, here is how I think most of the senior generation members view this situation.

A business is solid, like a block of ice. If you can keep it in the freezer, it will last a long time, and it can even just sit there in a block, on a shelf. And you can even lock the freezer. Once it is liquid, you don’t have to keep it in the freezer anymore, and you can use it for more things.

But, it is also easy to spill, and you need some kind of a container to keep it in. And you need to beware of thirsty people coming by and asking for a sip. The related problem is that it is now subject to evaporation, one step closer to steam, and much more difficult to control.

The generation that is currently in control understands how easily it can disappear, and they struggle with how they can be sure that some of the wealth will be available to their grandchildren and future generations.

Keeping a family together around a business is one thing, keeping them together around money is much harder.

 

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The Importance of Offering an Informed Choice

Editor’s note: This blog post is essentially a translation of last week’s post that was written in French

Recently I have had the opportunity to reflect on the subject of offering an “informed choice”. It began while I was taking a conflict resolution course in which I had the chance to act as a mediator between opposing parties, in a variety of scenarios.

The course used “interest-based negotiation” as its foundation, and one of the instructors noted that one of the goals of the mediator is to ensure that the parties make what he dubbed “an informed choice”.

I had never thought of it in that way, so I actually wrote it down, in ink, in my course binder, and added the word “BLOG!” beside it. (I actually turned it into two blogs; or a “blogue” –last week, in French- and this blog).

Now taking notes in class is not something that I do very often, since I believe that if something is really important, I will remember it, and if I don’t, it probably wasn’t that important anyway.

But the idea that one of the roles of a mediator is to make sure that the parties choose to accept or reject any offer ONLY after having understood all of the issues and consequences, well this was new and almost revolutionary to me.

Those who know me well know that I believe that communication is the most important subject for business families. Too often the lack of communication and poor communication become sources of major problems for such families.

The result of these communication errors is that people end up making decisions based on perceptions of the facts that are far from informed and clear, but rather erroneous and misinformed hypotheses.

When I work with families that are not at the point of requiring mediation, I encourage them to share their ideas and points of view, and to communicate regularly on these points.

This is always done on the premise that the best choices and decisions are made after reflection, in a situation where each person can say that they are acting with all of the information available, and that they are in fact making a fully informed choice.

Hidden somewere in this whole area is another important point. In many typical situations that require mediation, the parties are unrelated, and one party or the other may have a certain advantage when it comes to the information they have, their understanding of the situation, and the alternatives available.

When dealing with members of the same family, I feel that it is even more important to ensure that each individual has the opportunity to make a choice based on the same facts.

I recently listened to a presentation on the web by a Toronto colleague of mine, Jeff Noble of BDO, on shareholders’ agreements. In it, he mentioned a stunning statistic, saying that according to some lawyers, 80% of shareholders’ agreements prepared by these lawyers are never signed! But why not?

The goal of his presentation was to convince business families to work out their agreements in cooperative fashion, together, while sharing each other’s perspectives. This way, they can arrive at an agreement that each person will actually sign, willingly.

And that is why I title this blog “The Importance of Offering an Informed Choice”, and not simply “The Importance of an Informed Choice”.

What is both very important and sometimes very difficult is to make sure that all parties actually have the proper attitude and the spirit of cooperation necessary to arrive at these truly durable decisions.

You may believe that when you are dealing with members of the same family, it will always be very easy to achieve this, but unfortuately it is not always the case.

Thankfully for those families, there are people trained in mediation, coaching, and facilitating family meetings who are available to help.

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