Soriano: Keeping ownership within the family | SunStar

Soriano: Keeping ownership within the family

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Soriano: Keeping ownership within the family

Monday, September 04, 2017

MY two-week research and family coaching work in the US and Europe related to the dynamics of family enterprises was indeed a learning experience. To borrow a line from Albert Einstein, “The more I learn, the more I realize how much I don’t know.”

The series of engagements made me reflect that the more I learn about anything related to governance naturally unlocks the knowledge that there is so much more about ownership that I don’t know.

Ownership transition is a critical end-stage initiative that, when done early and correctly, produces real growth and harmony bereft of any tension and conflict long after the founder is gone.

Ownership governance and stewardship

One particular meeting during my two visits to the US that is worth mentioning was with Andrew Hier, senior advisor and partner at Cambridge Advisors. It was another opportunity to learn the complexities of ownership as family businesses transitions from one generation to another. Like its founder and chairman, Dr. John Davis,

Andrew is a globally-recognized expert on the ownership dimension of family enterprises and has served as facilitator and lecturer at Harvard Business School’s Families in Business Program.

As he intimated during our meetings, for visionaries and founders to transition the enterprise to the next generation members successfully, leaders must rigorously pursue the following ownership programs:

a. Craft ownership strategies.

b. Create an integrated, long-term ownership plan.

c. Put in place ownership governance forums.

d. Develop ownership and dividend policies.

e. Design a process in selecting and compensating board members.

f. Assess the most appropriate ownership models to include strategies for transferring ownership.

g. Work on a process for shareholder buyouts.

Under a globalized economy, high net worth families and SME owners must do more to make sure their wealth is preserved while passing the reigns of the business to the next generation. In return, next generation business leaders must grow and brace for more changes that are expected to happen in the near future.

Ownership alignment and stewardship is no longer limited to tax minimization and estate planning but has become far and wide reaching that founders of businesses must seek expert advice on how to go about crafting a future-proof ownership plan. Seeking the right advice from specialists is no longer an option. It is an imperative.

Wired and borderless transactions

While doing research and scanning the various modalities related to ownership and wealth preservation, family enterprises in Asia, the EU countries and North America are experiencing unprecedented regulatory changes as a result of technology and globalization.

These changes are clear manifestations that family advisors, wealth planners, estate lawyers and, most importantly, business owners must start embracing complex ownership models as part of their legacy building initiatives.

It is a clarion call for stakeholders to embrace change and initiate the process of stewardship and incorporating tools to further protect the purity of ownership as the family transitions to a multi-generational system.

So whether your enterprise has presence in multiple countries or is simply a small or mid-sized enterprise with local operations, business owners wishing to preserve wealth and control within their family inevitably face a multitude but unique set of circumstances. 

If the ownership plan is not initiated early, the American version of losing wealth by default would always resonate: “Shirtsleeves to shirtsleeves in three generation.”

Published in the SunStar Cebu newspaper on September 05, 2017.

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