How to manage the Family Office

We had a very interesting discussion with Michael Walsh of Family Business Network (Ireland) at our recent virtual members’ event on the Family Office. Michael was previously CEO of Woodford Capital, CFO at NTR plc and CFO of the Musgrave Group.Family business

Ireland has had many high-profile family business success stories including CRH plc, Fexco, Kerry Group plc, ABP Food Group, Musgrave Group, Doyle Hotels and Keelings. Michael provided an excellent insight into considerations and issues for business advisors when working with a family business.

  1. Understanding the family dynamics is vital for business advisors to a family business. It is important to build relationships with all the members of the family, in contrast to other businesses where the key relationship may be with a single managing director.
  2. Managing and resolving family feuds can be an important part of the role. There is a book written on the subject called “Irish Family feuds” by Liam Collins that is worth reading to understand this issue. There has been many long running, stressful and cripplingly expensive legal cases between families and similar situations can be avoided with good governance and planning.
  3. The role of the business advisor is often to begin a process to achieve conflict resolution between siblings, achieve a sustainable alignment and develop a shared vision and values for the family. This may involve many difficult conversations and requires strong communication skills.
  4. The “soft” issues are the most difficult. For example, the role of family members, who runs / works in the business, succession planning, pre-nuptials and the role of in-laws. The “hard” issues, like tax planning etc., can be handled by the accounting and legal firms.

Michael took the group through a case study as an example of what can be achieved with a successful implementation of the family business process.

  • A family charter was drawn up by the children (with expert input). The aims of the family charter are achieved through defining and supporting: the family values; sound family governance structures; family assets (business/other); the role of family members; and the role of outside advisors. The family charter is supported by a suite of legal documentation.
  • A governance framework was put in place that involves a family council, four meetings per year, and monthly update conference calls whereby all key decisions are made by the ultimate family decision making body.

The model was tested when key decisions had to be made during the global financial crisis and during issues with external shareholders. In both cases the structure worked as intended and delivered results for the family.

“You will never truly understand your relatives until you have to share an inheritance” – Mark Twain