For the controlling generation the largest challenge of them all may become the emotional aspect of handing over the control. Meanwhile, for the next generation the question is: will they have the same commitment and will as well as necessary skill? To prepare the successors, their involvement in the business may need to be gradually increased to build understanding of the business and a sense of stewardship. Not to forget relevant education and training into becoming an active owner or taking on an operational role, or both.
An opportunity to decline and pursue other career paths will also need to be considered. The world is full of opportunities and it does not serve the family nor their business to have an unmotivated owner in the lead.
Family office: centralizing management of family matters
Many families have an informal structure that exist within the business, i.e., an embedded family office, engaged in managing the family’s assets and other matters. The tasks are often assigned to trusted and loyal employees, such as the CFO and their department. The arrangement can be beneficial until the family’s wealth increases, and business needs get more complex, requiring a more efficient structure.
There are many triggers that drive the creation of a dedicated legal entity that serves the family. It releases business assets from handling family matters and separates the family’s wealth from the business wealth. In addition, it enables the family to centralize and professionalize the management of family wealth, tax and legal matters, record keeping, global compliance, philanthropy and many other services. Among the benefits are also increased privacy and confidentiality, as the family office becomes the sole entity keeping records and documentation about the family members.
The family office setup that works for one family is not a template to copy to another. All families are unique and so are also the family constitutions, succession plans and family office structures they need. A holistic view needs to be taken in order to establish the optimal solution.
Let us explore these topics together
We strongly encourage that your family considers these topics to safeguard your legacy as well as your cross-generational growth of wealth and success in business. Utilizing an external advisor to facilitate and guide in these matters is vital for objectivity, subject matter expertise and achieving the best possible outcome.
As trusted advisors to enterprise-owning families in the Nordics and around the world, we have the experience, expertise and programs to support your family on its journey. Let us explore these topics together and unlock the development potential of your family and your future.