In this business tv show, Paul George from the Business Families Team at PricewaterhouseCoopers explains why it could be in your best interest to buy out the rest of the family:
“The other thing that can be a problem with a family business that thrives over many generations is if you’re not careful you end up with a very unmanageable share holder register.
You know in a modern family it’s often the case that the entrepreneur will split the shares pretty equally among his children. If they do the same then in some families within generations you’re talking about dozens of shareholders and you can end up in a very difficult and unmanageable situation where its still a private company but its got a pretty widely spread shareholder base who aren’t closely associated with what’s going on and often the company carries on operating in much the same way they did in the first generation, with a very low dividend, really running very conservatively for the benefit of the business, not the shareholders and that’s a recipe for all sorts of problems if its not sorted out.
The companies that survive longest in terms of generations, if you go back through you’ll often find there’s been a succession of single children. The two big problems in family succession are having no children and having many children and there’s a process that many of those survived have gone through every 2 or 3 generations of, if you like pruning the family tree, buying out those parts of the shareholder register that aren’t really heavily committed to the company anymore.
Borrowing in the company and doing that in that way and history says that’s a successful part of the process of keeping a family process healthy in the long term.”
See more business news television shows from Paul George, as he gives his top expert business advice at http://www.yourbusinesschannel.com
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Duration : 0:2:5
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Nice Nice Video. I …
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I love it!
How funny, “pruning …
How funny, “pruning the family tree”! lol
Great advice again …
Great advice again from PWC.
Yeah. so much …
Yeah. so much easier before when you could just give it to the eldest and send the others abroad to the colonies.
Interesting stuff. …
Interesting stuff. It’s easier to have an agreement amonst two than ten also. Difficult because the family need to determine not only who is most involved, but also who is best to carry the business forward.
I found this video …
I found this video quite interesting as it is something that i have not really thought about before. I am from a big family though so in some ways it is probably easier that there is no family businesses to have to worry about.
I think all of us …
I think all of us wish we were in that position…dreams are free I guess.
Yeah i see how that …
Yeah i see how that would become unmanageable quite quickly in a larger family. It would also be important to keep the number of private shareholders low in order to maintain the ability to make important descisions without having to consult maybe dozen of members.
I agree …
I agree businesstvrebecca, I wish I was in that position, I’d buy them all out
I agree with you …
I agree with you businesstvrebecca. I honestly hadn’t even thought about this advice as none of my family members now own their own business. And businesstvandie – I don’t think it is just single children and family businesses that work hard.. we ALL do! Some people just strive further in a family business knowing they will reap the rewards in the future. But for me, it’s all about self satisfaction.
Interesting advice, …
Interesting advice,not something I had thought about as I’m not in that position (sadly)
I agree with PWC …
I agree with PWC about single children and family businesses. I think they work extra hard to make things work.
Great advice. This …
Great advice. This interview (there was a lot more) was v interesting.
I hope my kids and …
I hope my kids and grandkids have this problem