Managing family fall-outs

Family ties are strong and that can be a massive positive when it comes to growing a business. But when things go wrong in a family concern the fallout can be felt far and wide.

That is why it is vital to have proper structures in place to mitigate those affects and prevent real damage to both the business and relationships.

It is important to at the start of the business’ life to make sure everyone is clear about their expectations and requirements and how things will be handled if situations change.

Top of the list should be a Shareholders Agreement, drawn up by a solicitor specialising in business matters.

Advice on the content and its implications is needed. Make such that there is full guidance on the type of issues to be incorporated into the agreement.

Consider the Articles of Association and whether there needs to be specific clauses that relate to the management of the business.

Generic articles adopted when most companies are formed will not be specific on a number of issues that could arise.

Also be mindful of succession planning in advance. Individuals may have ideas that don’t fit with other family members so it is better to address early to avoid any misunderstandings.”

I’d also recommend a general code of corporate governance. It would be a mistake not to hold regular meetings to assess, plan and communicate. Many problems can be avoided simply by good communication.

Giving clearly defined roles to individuals can also create a team mentality and it pays to agree a method of dispute resolution.

Drawing up a family charter could also prove valuable when it comes to long-term harmony.

Although not legally binding, it can outline important guidelines, including who has a say in the most important decisions, and the entry requirements for the next generation to join.

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