We do not inherit the Earth from our ancestors, we borrow it from our children
Mum and Dad are entrepreneurs and they have three children … how should the company be organised?
In generational changeovers the starting point is understanding the needs of parents combined with an analysis of the legal and asset structure of the enterprise(s) involved or other family property. The principle guiding our work at this sensitive time must always be that of fairness. We start with objective fairness which is based on true asset valuations but we also arrive at perceived fairness, which involves emotional and psychological evaluations that cannot be ignored. Another aspect to consider carefully is that of the merit of potential heirs. In this case too, merit and fairness cannot be considered in isolation.
How do you take the heirs’ characteristics into account?
Listening to the family histories is very important in order to understand personalities, skills, aptitudes and talents that will direct the allocation of inherited assets.
In some cases it is necessary to create ad hoc instruments to protect wealth, such as foundations and trusts, for those who are most vulnerable.
The entrance of heirs in family enterprises should be clearly regulated right from the start to avoid any misunderstandings from having negative consequences on the performance of enterprises, resulting in damage to all.
When is the right time to deal with the delicate issue of passing the baton?
Never! At least this the entrepreneur’s typical reply. It is up to us to highlight the usefulness of dealing with issue in time, even when the entrepreneur feels that it is too early and not yet the right time. Only in this way can mistaken economic expectations be prevented from harming family equilibriums.