CPABC Industry Update Winter 2014 | Page 10

Gotham Light/Bold - Myriad Pro Light- 10.5/15pt Tranistioning Family Businesses... (cont’d) The disagreements that create these fault lines are actually quite predictable. They usually involve, either individually or in combination, the following five questions: Who will control the business  and how will power be distributed within the business and between the business and the family? What are the values that should  drive our business decisions, and how do we reconcile different value systems, personalities, worldviews, and communication styles? These “hot button” issues often trigger disputes among family members. Each member tends to have strong feelings about these matters and they can lead to conflict. Many families maintain a code of silence and don’t address these issues because they recognize the volatility of raising these questions. When they do arise, they often lead to conflict, the exit of family members, the formation of opposing factions, or a stalemate that is difficult to resolve. At the extreme end of this spectrum, people file lawsuits. Short of that, the business’ performance will decline and the family cannot thrive. The Solution Many family businesses attempt to adopt best practices. They create governing documents and structures to coordinate both the family and the business. They also work on understanding and adopting role differentiation and boundaries. While these are valuable, if the family does not have the underlying skills to make these “best practices” work, they are for naught. page 10 | How do we communicate  information about the business in ways that create engagement and sufficient transparency? Who gets to work in the  business and how is family employment done fairly and effectively? How will money be  reinvested, divided, and distributed? One way to develop these skill sets is through regular family gatherings designed to address the tension