The audience was comprised of family business owners and executives, ranging in size from middle-market to multi-national. Participation was by invitation only. While there are many family business events each year, this one was unique in that it was produced by two cooperating academic institutions of notable standing.
Ann Dugan (Family Office Exchange) and Carol Wittmeyer (St. John Fischer College) were the co-chairs of the event. The Educational Partners, Anne Smart (Loyola University Family Business Center) and Dann Van Der Vliet (Cornell Smith Family Business Initiative), produced the event.
The discussion was composed of four topics:
As a faculty member, I was charged with leading discussions on conflict; business and family governance; and managing the competing interests of owners, boards and management teams.
This event covered the full spectrum of both family and business governance. On the family side, the governance spectrum runs from a family assembly, to a family council, to a functioning family office.
[Editor’s Note: Need a refresher on the different family governance structures? A family assembly is an official forum for family members to discuss business issues and share their opinions. Think of it as the roundtable of family governance. Once the family grows too large, a family council can be formed to represent the business interests of the larger assembly. The council consists of elected members that communicate on behalf of the family. Finally, a family office is a private firm that manages a family’s wealth from generation to generation. It invests the family’s capital, manages the family’s financial affairs and offers family governance services, among other services.]
That being said, each family office is unique, being driven by the needs of the family. There is no minimum requirement to have a family office other than to say “we have a family office” and do something to edify the statement. As the saying goes, “If you have met one family office, then you have met one family office.”
But if you want to start a family office or evolve your family governance, then consider these important tips, courtesy of the roundtable:
On the business side, governance evolves from a founding decision-maker, to a Board of Advisors, to a Board of Directors. There is often a parade of consultants between the Founder and a fully functioning Board of Advisors. While the Board of Advisors is a more informal board made of experts, the Board of Directors is a formal body with legal responsibilities and fiduciary duties.The final step of governance evolution is when the family elects independent, non-family members to a fiduciary board.
The roundtable offered three memorable remarks on effective business governance:
It may be helpful to revisit these takeaways as your family business moves through the evolution of business and family governance structures.
[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: The Effective Director.]
Bruce Werner is the Managing Director of Kona Advisors LLC, which provides advisory services to owners and investors of private and family-owned companies. With exceptional experience in finance, strategy, M&A, governance, and succession planning, Kona Advisors creates practical solutions to the most challenging corporate problems. Mr. Werner is an experienced Corporate Director, leading businesses through…