Family businesses letting go

I’ve developed the concepts of “control from the grave” and the “ghost on the wall” in family businesses in my two earlier blogs.

In this final blog, I want to look at a case where this control takes the form of letting go. This is about new leaders being able to make decisions and take actions the previous generation may not have been able to.

To illustrate this, I’d like to use the example of the Johnson family. John Johnson and his wife Eunice founded Johnson Publishing in 1942 to bring to market Ebony and Jet, among the first magazines targeted at African-Americans.

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The “ghost on the wall” theory of family control

Last week my last blog introduced the idea of “control from the grave” in family businesses and examined how it can exert such a powerful force. I want to explore this theme further and look at control that’s implicit and has more to do with influence – I call this my “ghost on the wall” theory.

This time, I want to use the example of the Crown family business. Material Service Corporation was started by 23-year-old Henry Crown after World War I with a loan of US$10,000.

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A grave matter for family businesses

Family business founders often want their ideas to last for generations. Indeed, the legacies of some leaders are so strong that they end up controlling their companies from beyond the grave. Such a strong legacy can have benefits, but it can also have truly terrible consequences. Continue reading

Succession isn’t just about the family business

Most of us think succession is just about the family business. That’s hardly a surprise – after all, succession in family businesses is a frequent focus of this blog. But succession can – and indeed should – also be about families’ assets outside their businesses, such as equity, bond and real estate investments.

There are various ways to help with the succession of assets. One is to consider a family limited partnership, which can hold investment assets outside the family business in an effective and an efficient way.

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A regulatory headache for family offices

Since the Global Financial Crisis, governments around the world have cracked down on financial markets. Not before time, say those involved in family businesses — many of whom believe that the financial world, or at least parts of it, has become too unruly and, indeed, too big.

But the crackdown might have unexpected consequences for family businesses, or, at least, for family offices managing the wealth generated by large family businesses.

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Four challenges for Middle Eastern family businesses

I recently attended two family business forums, in Riyadh and Al Khobar, Saudi Arabia. At these events, many of the big issues faced by family businesses were discussed, such as succession, governance and the separation of management and ownership.

But I was struck by a common theme throughout many of the round table discussions: namely, the challenges that face family businesses in the Middle East. These challenges are not unique to the region, but they are more prevalent than in other regions.

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