Lack of trust, lack of common purpose, control and avoidance of difficult conversations. Essentially the plot lines for the hugely compelling TV drama, Succession but also too often the reality in family businesses. The payoff of aligning a family business’s shared purpose, mutual trust, and collective decision-making produces results in business performance, family relationships, and a more effective force for positive social impact. Forsters corporate and private client lawyers have enormous experience in helping family businesses navigate these complex issues and in designing structures which bring the solutions together into a governing framework.
Four common fault lines that lead to family business breakdowns: Lack of trust: Only 30% of family businesses survive into the second generation. This means that in 70% of cases, the family loses control of the assets. A lack of trust and communication are responsible for 60% of that failure rate. Lack of a shared purpose: Family members in different generations may have different values, a shared purpose can help employees to align their values and interests in support of a common mission. Control vs. care: Family businesses can go under for many reasons, including conflicts over money, poor management, and fighting about the succession of power from one generation to the next. Cordial hypocrisy: Family members too often avoid tough issues by avoiding meaningful conversations. Left unaddressed, these tensions increase distrust in families and obstruct performance in their organisations.