Engaging the Right Family Business Consultant

By Prof. Enrique Soriano

One of the most difficult tasks for a family business with an autocratic founder or having second-generation siblings (oligarch mindset) is to ask for advice from an outsider, more so from a family business consultant. It is tricky in the sense that it allows a non-family advisor to speak his or her mind on something that can be considered forbidden, sensitive, thorny, and deep-seated, which may have been affecting relationships among family members for the longest time. I am sharing an email I recently received from an Asian family asking for our help. They have operations in 3 countries belonging to the European Union, but the cold treatment and animosity between the leaders have stunted their growth.

“The day papa passed away, I stopped communicating with my older brother. It was intentional. I just wanted to get away from it all…the name-calling, arguing over petty issues related to the way the business was being managed, and in-law quarrels. It reached a point where there was physical fighting… It was just too much hostility between me and my brother. I felt that papa made us compete for his greater attention and after learning about the contents of papa’s will, I was fully convinced that he was the favored son. It’s been 25 years. The business has suffered enough. We are both old and sickly. I am 68 and my brother is 72 and I believe it is time to reach out, plan the transition and think about the future of the family business. I genuinely believe my brother also feels the same. My heart goes out to the next generation; they have been caught in the crossfire and have become estranged as cousins resulting in poor business performance. I hope something can be done before it is too late. Can you help me and my family?”

This is the kind of intervention in which consultants, at least the experienced ones, can really make a difference when owners express a genuine desire for change.

In a recent online forum organized by a European-based Family Wealth Office, I was asked to share my insights on the need to engage the services of a family business consultant.

When is the right time to engage the services of a family business consultant? 

Family enterprises go through several stages, depending on which phase the family is currently in. Personally, the most crucial time when a consultant is urgently needed would be the time the leader, usually in his 60s, starts contemplating on pursuing generational succession among his fully engaged offspring. This transition involves both leadership and ownership of the business. This process will also include the transfer of family assets that will involve outside experts and trusted advisers like lawyers and accountants collaborating with the family business consultant and, of course, the senior leader. Usually, these are the parents/owners or siblings as co-owners.

Succession requires competence, objectivity and focus from the consultant. On the other hand, commitment, sincerity and desire are essential values expected from the current owners cheerleading the transition process to completion. It is daunting and challenging and will require emotional acceptance from the leader that the time has come to lead this very critical and significant milestone in the life of the enterprise.

What important elements must a family-owning business expect before engaging a Family Business Consultant? 

Expectations must be well defined. The 5 R’s that family members, especially the next generation siblings, must embrace are roles, rules, rights, responsibilities, and real accountability. The consultant must be able to articulate and clarify thorny issues right away as any initiative that provides clarity between family and business can significantly minimize the confusion in the workplace.