Succession conspiracy in family company

Does your business look like this?

Ivan Landsberg, a Yale University expert in family businesses, coined the term succession conspiracy - how business owners, their spouses, their family members, and non-family co-workers either consciously or unconsciously make damaging decisions that foil the effective succession of the busines to the next generation.

He described three general types of family business management structures back in the 1980s:

Controlling owner:  A single owner is involved in every aspect of the business and makes critical decisions.  Typically little or no planning occurs for this owner's departure.

Sibling partnership:  Siblings may share leadership, or a lead sibling may be designated - or designated by default - to make most of the business's key decisions.

Cousin consortium:  This structure is common among some of the biggest family fortunes in the world.  When the business has been passed on to the children of prior sibling owners, eventually several branches of the family share ownership, and coalitions may be formed to create blocks of stock that represent more voting power.

Aligning with any of these ownership structures doesn't mean your family company is necessary sliding off the rails.  But if you recognise yourself in any of these structures, ask yourself whether the following also applies:

• The owner has created a succession plan that not only sets benchmarks for who the next generation leadership will be but also comes with full buy-in from all family memebrs, young and old, with a stake in the business.
• The owner and top family officers have spoken with family members recently either separately or in a group about their feelings about the business and whether any conflicts or issues need to be worked out.  Better yet, is there a formal meeting structure?
• The owner has helped craft - with experienced legal and tax professionals - a quality transition plan that allows her the money and freedom to work in the family business if she's asked or to comfortably start retirement or a new phase of her career.