201912.11

Leadership in a growing business is a team affair. This is especially true when facing a change of ownership and control. Here is Part 1, our first three tips to help you build strong governance at all levels, for a smooth transfer!

You can read part 2 of this article on Friday December 13, by visiting our articles section here.

1. Housekeeping, before the transfer!

For a family business, good governance starts with good relationships between family members. We must ensure they share common visions and values. By setting up a family council, the family in business has a forum in which its members can exchange. This allows the address of both personal topics and those more directly related to the company. The support of an independent moderator might be helpful.

It is not necessary to wait until the company is in a transfer process before setting up a family council. The earlier the better. A long-standing family council will be more effective when the time comes for the changing of the guard at the head of the company.

Read our article on the Family Council here.

2. Think SUCCESSFUL transfer: get advice from a trusted source

The inbound and outbound CEOs need to make many strategic decisions. It can be useful to be able to test your ideas before applying them. For this, nothing can substitute the establishment of an advisory committee.

This committee is made up of a small number of “wise men”, men and women with proven experience running a business and a deep knowledge of the industry in which the company dwells. The Advisory Committee meetings provide the CEO with a secure environment to validate their plans and projects. The members of the advisory committee must be independent and have the sole concern of helping the CEO in the design and implementation of their strategy. It is therefore best not to appoint consultants who could have services for sale to the company.

3. Hold yourself ACCOUNTABLE, at all times

Every business organized as a corporation must, by law, set up a board of directors composed of one or more directors. The directors of small businesses are, for the most part, its shareholders and managers. The majority shareholder can act as sole director. This combination of functions sometimes leads to errors in the powers and duties of directors.

There comes a time in the life of a company when it is necessary to distinguish the roles of director and leader. The leaders are those who are called upon to manage the day-to-day business of the company. Under the leadership of the President, they also formulate the company’s major strategic directions. The role of the Board of Directors is to approve (or not) these broad directions and monitor their implementation.

At least one director must not be a shareholder or a company leader. Their presence brings a more objective look at the management of the company’s management.

Despite the fact that the founders of the company have to be accountable to independent directors, such governance helps to professionalize the management of the company. In a business transfer context, the presence of such governance will be an important positive factor in building a relationship of trust between the transferor and the buyer.

You can read part 2 of this article on Friday December 13, by visiting our articles section here.


Photo credit: Photo by Alexandr Bormotin on Unsplash