My Approach to Succession Planning
1 Family Governance and Continuity Project
This document will describe in detail the approach we will take and the methodology we will apply in helping your Family devise a Family and a Business governance platform, to ensure the sustainability of the family business in the hands of the next generation, (hereinafter referred to from time to time, as “Your Family”, the “Family” or the Family Business”.)
2 Background and engagement overview
Firstly, we would like to confirm that assisting business families with this type of project is an area in which we have significant experience, having successfully assisted many other family businesses all around the world with similar planning and succession challenges.
Walid S. Chiniara and his team are specialists in family governance, corporate governance, and next generation family education and coaching. They have over 23 years of relevant practical knowledge and experience, working with over 140 families, controlling in excess of $B 500.
The output of this journey will be: (i) Clear succession arrangements in terms of ownership; (ii) Alignment among the family members as to how the business and the wealth (taken in its broadest sense) will be governed going forward; and (iii) A family constitution recording the agreed governance and family policies.
However, building a consensus where there are ‘family' and ‘business' issues to address is not always an easy process, and the whole exercise needs to be handled sensitively and methodically.
Accordingly, we have developed a tried and tested methodology, which we have tailored to fit the circumstances of the family we work with.
It is important to say at the outset that our role will be to act as facilitators and advisors in order to assist the Family in reaching consensus around an agreed common project for the future. For this reason, we would like to stress that for our role to be successful, we cannot become the agent of any one individual and must maintain a neutral position throughout. In order to achieve this, we would always see the Family members in these circumstances as the group of family owners collectively - this point is fundamental to the success of the exercise.
We will help devise Family and Corporate Governance frameworks tailored to address the needs of Your Family and of its Family Business, to ensure the strength, sustainability, and security of Your Family legacy long-term, and to support the orderly transfer of wealth across generations.
Overleaf we have documented our methodology outlining where we believe we can add value and support you and your family.
3 Our Approach
A family business is a partnership among individuals who happen to be blood related and/or related by affinity.
Because of the intrinsic nature of a family business, striking a balance between family and business has been challenging for most business families around the world.
Time and time again, it has been proven that the transfer of wealth from one generation to another does not take place by osmosis. It requires careful planning.
Experience has shown that succession planning is a journey, however, having a clear approach and an end-goal ensures that this journey is not drawn out over years or even decades with no clear final goal, which can create fatigue, disengagement, and disappointment within families.
For this, we have developed a 7-Step Methodology™ that paves the way for a systemic approach to family business succession planning. This methodology has been tried and tested successfully over the past 23 years.
Our approach is three-pronged and consists of the following 3 phases:
1. A Discovery phase, where we chase after the facts, and seek to better understand the Family and the Family Business.
2. An Alignment phase, where we assist in levelling the field, so to speak, and secure the alignment of the Family members around a common project; and
3. A commitment phase, where we introduce communication platforms, governance systems, and checks and balances that secure the commitment of the Family and their allegiance to the Family Business.
Phase I – Discovery Phase
1. Introductory workshop
We tend to start with an introductory workshop whose objective is to discuss:
1. Succession planning in a family business context;
2. Challenges associated with the successful transfer of wealth to the NextGen; and
3. Tried and tested solutions, based on real life experience.
We envisage that this workshop will be attended by the whole nuclear family, and if they wish their most trusted advisors.
During the workshop, we would give illustrations and examples of how other family groups from around the world have dealt with their governance and succession challenges. This will enable the family members to think through their own specific issues in a more informed fashion. It is important to note however, that during this workshop, the particular circumstances of your Family would be off the agenda and will not be discussed; we would not feel comfortable in a discussion about specific issues where we had not met the family members privately first.
In addition to providing you with some insights into family enterprises, the workshop will be interactive, and will give all participants an opportunity to ask questions and participate actively in the conversation. We find that it is very important for the success of a project like this that the whole family be engaged, as this will ensure everyone’s buy-in.
We would expect that whilst we will be among you during the Introductory workshop, it would also be helpful to arrange some individual meetings with the family members, at the end of the workshop, so that everyone will have the opportunity to ask questions in private and increase their level of comfort as to the approach proposed and their expectations.
The next stage would involve a background review and more in-depth individual meetings with both the family members, key non-family advisors, and possibly senior executives, as you see fit.
Allow for one or two (1 or 2) days for this first session, depending on the number of family members and the complexity of the issues that may arise.
2. Background Review and Individual Meetings
Following the introductory workshop, we propose to hold individual meetings with each of the family members. In advance of these, we would share an information request to help prepare for the meetings.
At first, we would meet privately with each family member, to obtain a clear picture as to individual views, needs, and wants.
We would also envisage holding individual meetings with certain key non-family members having significant influence over the Family Business, or Family finances, in order to gain an additional perspective and in-depth understanding of the facts. We would discuss this matter with you in due course.
These meetings will be totally confidential and their purpose would be to draw out individual views openly, which might not be possible with others present. The information shared with us will remain, at all times, private and privileged, and under no circumstances will it be shared with others, including family members.
The main areas that will be covered in these meetings are the individual’s background, aspirations, and perspectives in relation to your Family and collective wealth. We should allow around three to six (3 to 6) hours for each of these meetings and it is from these that we will be able to analyse independently the substantive issues and therefore address them successfully. In some cases and where applicable, we may need more than one meeting.
There may also be circumstances where we would organize family gatherings, to summarize our findings, and/or to debate a given topic, that we believe is of interest to the group.
Allow for a minimum of one (1) week to complete this exercise, the whole depending on the depending on the number of family members and the complexity of the issues that may arise.
3. Feedback and Planning Session
At the conclusion of these meetings we will be able to gain an improved understanding of the issues and dynamics that exist and we will share our feedback from a family strategic planning perspective, in the form of a presentation.
The purpose of this session will be to establish a common understanding of where you are now, including identifying gaps and areas where work is needed. Also, we will agree together a roadmap which will enable the Family to clearly articulate and align around a shared vision for the future, supported by your common values.
The steps beyond this session are provisional as it will only be once we have completed the ‘Fact Finding’ phase that we will be able to make recommendations about what is needed in your particular case.
Our findings will be the basis for the roadmap ahead.
We will work with you to devise this roadmap, as it will represent the foundations for the next phases.
Allow for a minimum of two (2) days to complete this exercise, the whole depending on the number of family members and the complexity of the issues that may arise.
Phase II - Alignment Phase | Defining the Partnership
Meetings and Workshops
The family business ecosystem is comprised of three main elements: The Family, The Family Business, and the Family Finances.
While each one of these elements is independent and autonomous, nevertheless, they remain intertwined, and complement one another.
Addressing one element to the exclusion of the other would render the exercise futile.
The work we would undertake, during this phase will be based on the 7-Step Methodology™ we have devised, and using this methodology as a framework, we will work with you to create a set of objectives and agree milestones to achieve your goals, to the satisfaction of the Family and its Family Business.
The 7-Step Methodology™ offers a systemic approach to a successful and sustainable succession plan.
It will help achieve the following:
1. Understanding the Facts and levelling the field;
2. Securing Alignment among family members;
3. Ensuring the Family agrees a Common Project for the future; and
4. Ensuring the Buy-in from all family members and their Engagement long-term.
As we will discuss at length, succession planning is not a process, rather it is a journey. It develops at the pace of the lowest member of the family.
Based on our experience, we envisage that this journey will likely include a combination of a number of family meetings and practical workshops, where all the elements and sub-elements comprising a family business ecosystem, will be discussed and debated at length.
Allow, on average, for six to twelve (6 to 12) two-day sessions to complete this exercise, the whole depending on the number of family members, the speed of the slowest member of the family, and the complexity of the issues that may arise.
Phase III – Written Commitment | Family Constitution
1. Governance Development
Governance requires the creation of institutions and the adoption of rules to protect them.
For a family business to survive long term, it is required to (i) create institutions, and (ii) adopt and implement a set of rules, its members are comfortable with, that are scalable and can evolve with the needs of the Family and the Business, and that are applicable to all family members, seniors and juniors.
The aim of the meetings will be for the Family to identify all the issues that matter to them, and for them to debate these matters and reach a consensus as to how they wish to deal with them.
This consensus will be documented in a family constitution, tailored to address the specific needs and wants, of the Family and the Family Business, in accordance with their underlying set of values and aspirations.
The family constitution is a charter of trust among the family members. It is also a partnership agreement, among the family members. If its provisions are compliant with applicable laws and regulations, is becomes binding among its signatories.
Traditionally, a family constitution would include three major components, each dealing with one of the elements comprising the family business ecosystem, discussed above.
We would work with the Family to devise a comprehensive family governance framework to address the relationship among the family members and their relationship with money and the source of money.
A family constitution would include provisions formalising this Family governance framework on paper, and setting out statements of intent or agreements entered into by the Family, while defining their relationship with the Family Business and the Family Finances. It will outline the Family’s vision, their core values, and most importantly, their commitment to them.
It provides a documented method for reaching a family consensus on the manner in which a range of issues would be addressed. Further, it offers a practical guide and a framework with respect to managing the relationship among family members, those individuals behind the Family Business. It will further deal with the needs and ambitions of each Family Member, while reaching a modus vivendi that will reduce the risk of potential conflicts.
The establishment of a Constitution will encourage the Family to articulate and examine their rights and obligations as well as their needs and goals on a regular basis, which is essential to reinforcing the unification of the Family system, while also developing the Family’s commitment to the success of their common vision. The benefits of doing so are immeasurable and include improved Family Business performance, managing Family relationships and expectations, as well as sustaining trust and communication.
The Family considerations typically covered under this section of a constitution are as follows:
History of the family
Name of the family and its importance
Vision short, medium, and long-term
Values guiding the family
Embracing Ownership as opposed to Shareholding
Leadership and Communication among the family
Code of Ethics – the family Trademark
Strengths the family bond
Security of the Family at all levels, physical, cyber, etc.
Continuing education of Family members
2. Corporate Governance
We would work with the Family and the Family Business to devise a comprehensive framework to address its corporate governance needs, and to reinforce the applicable policies and protocols to be followed, to ensure the institutionalization and the successful performance of the Family Business.
Corporate governance addresses the relationship between the shareholders (owners of the financial interests in the Business), the management (Board Directors and the C-Suite executives, and those family members with responsibility in the business), and the various other stakeholders.
The aim of corporate governance is to create a robust environment in which family matters are separated from business matters, and where emotions are put in check, to the benefit of reason. The efficient implementation of such systems and processes, and the respect of checks and balances, would ensure that the Business would continue its upward trajectory in terms of performance, irrespective of who controls the decision-making process.
The corporate governance framework would detail the mandatory and recommended corporate governance practices, and would create clarity on the modus operandi of the business. It would also ensure impartiality thereby reducing the chances of any potential conflict among the Shareholders, the Board of Directors, the Executives, and other Stakeholders.
The corporate governance framework would be devised in accordance with applicable laws and regulations of the Hellenic Republic, as well as with best practice and international standards, in collaboration with your in-house counsel.
The corporate matters typically covered under the corporate governance framework are as follows:
Core/Non-core business activities
Shareholding rights and obligations
Management, at Board level and C-Suite
Board of Directors
Chairman vs. CEO
Capitalisation of the business
Financing of new projects
Personal and corporate Guarantees
Debt/equity ratios, and their impact on business
Pending litigation and its effect on business
Reporting mechanisms, and shareholder expectations
Employment of family and non-family members
‘Black Swan’ provisions
Exit policies and mechanisms
3. Family Private Wealth Governance
This phase will overlap with the work undertaken to build a comprehensive family office infrastructure.
When undertaking such an in-depth exercise our approach would be to focus on the elements that can potentially result in a conflict.
Separating personal financial wealth from corporate financial wealth is a delicate exercise.
In this regard, we would work with the Family to address the relationships between the beneficiaries of the family office, their relationship with their trusted advisors and third-party providers. This exercise would include a deep dive into the family vision, values and legacy ambitions.
The matters typically covered include:
Personal Wealth considerations
Separation personal / family assets
Vision, Values, and Purpose
Defining the Beneficiaries
Their rights and obligations
Allow for a minimum of two to four (2 to 4) weeks to complete this exercise, the whole depending on the number of drafts and the complexity of the issues being discussed.
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