The Value of Family meetings in early stage family businesses

Jennifer Pendergast
Jennifer Pendergast

If you’re a frequent reader of this blog or other family business advice, you know the value of holding family meetings.  They provide a forum for discussing family issues, educating family members about the business, fostering trust, and sharing the family legacy and values with future generations.   Does this kind of approach really make sense if you are just starting to build your family business legacy? 

Take the case of a 2nd generation family business, run by four siblings in their 40s. Their father has already handed over the reins, their oldest 3rd generation in middle school, and their spouses not really involved.  While many families would start meeting at this point including children, spouses and the founding generation, the four siblings, 3 brothers and a sister, want to build their sibling partnership before they open up meetings to the full family.  They meet frequently as an executive team, so have a ready forum to discuss family and ownership issues. 

The challenge with this meeting format is longer term issues rarely get the attention they deserve in the rush of day to day operational issues.  The importance of longer-term thinking was recently surfaced for this family when someone raised the question of how the family might capitalize on the 2012 estate tax law.  To tackle this question and surface others, the siblings decided to engage a facilitator and hold their first ownership meeting.  At that session, they jointly articulated their long-term vision for the company and identified topics that needed further discussion. They realized they needed to start developing a next generation of business leaders because their children wouldn’t be ready to take over when they retired.  They also agreed that their current dividend policy, loosely defined, worked well for them but wouldn’t work well for the next generation.  Finally, they determined that they needed a shareholder agreement among their generation to ensure that their vision of maintaining family ownership was fulfilled. 

With these important topics on the table, they agreed to meet every 4 months as owners to ensure they have a place to address these important long-term issues.  As this example shows, family meetings come in a number of shapes and sizes.  The important thing is to ensure you’ve created a place for owners and family members to discuss important topics that affect the long-term future of the family enterprise.

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