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FAMILY BUSINESS
Disputes In Family BusinessesPaper 010-010
Paper 010-010 2
1. Mixing Family And Business
• Distinguish between family and business
Paper 010-010 3
2. Generation Gaps
• Can threaten the survival of a successful family business
• “Blood is thicker than water”• Do not need “formal” control systems• Family conflicts are fairly prevalent• High failure rate of small businesses• Necessary to agree to a formal structure
Paper 010-010 4
3. Major Crisis Points In A Family Business
• Marriage breakups• Death or permanent disablement of a
principal• Bankruptcy• Retirement• Partnership/Shareholder disputes• Transferring control to the next generation
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4. Communication
• Familiarity can mean that a lot is “assumed”
• Formal communication mechanisms:– Regular Meetings– Family Retreats– Family Conference
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4. Communication cont'd....
• Documents needed:– Business Plan– Succession Plan– Responsibility Chart– Estate Planning
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5. Settling Disputes
• Outsiders or independent persons• Establish “dispute mechanisms”• Pre-planning will contribute to avoidance
of disputes• The items to be considered:
– Recruitment of employees– Job descriptions– Regular appraisals of performance
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5. Settling Disputes cont'd....
– Training– Outside business involvement– Professional development– Regular family meetings– Business Plan– Succession Plan
Paper 010-010 9
5. Settling Disputes cont'd....
– Review of salaries based on actual performance
– Estate planning– Sale of the business– Selling the business to the next generation– Retirement funding