Understanding the context of family offices and enterprising families
Before I started in VC, I co-authored a small book called "Managing the Soft Issues in Family Business Succession", written for & with the principles. Turns out it's worthwile read for VCs afterall.
Back in the days, before I got started in VC, I embarked on a project on the invitation of the man who would later become my mentor for years, Steen Haustrup, 3rd generation of a successful Danish family business.
The project was to map out the most important soft issues facing families when handing over the business to the next generation and how families, across generations, think about these issues and deal with them.
Last week, I shared a reflection from that project on the newsletter leading to quite a few requests for the book, so thought I’d share it here as well.
While the book has nothing to do with venture capital it was a project that gave me, at the very least, an inkling of an understanding of what’s at stake in enterprising families. And just as VCs advise founders to understand the context of their investors before they raise from them, I would advise VCs do the same.
If you’re interested in understanding the world of enterprising families, I’d be more than happy to share a copy of the book and have a chat.
Managing the Soft Issues in Family Business Succession
The handover of family-owned companies from one generation to the next is considered one of the most critical phases for any family business, and one of the most frequent sources of problems for them. We set out to write this book for families facing just such a succession situation.
While there is no shortage of literature or consultants promising to assist with the financial, tax and legal issues around succession, succession plans also involve a number of ‘soft’ or ‘human’ issues, which need to be addressed and properly tackled.
Examples of soft issues treated in the book include questions like how to prepare a succession plan? How to determine the prerequisites for the next generation to take over management? What should be the outgoing CEO and main shareholder’s future contact with employees? What should his or her participation in formulating company strategy be? And can she continue to have an office at the company premises? Clearly, there are plenty of issues that need to be handled.
Often, these soft issues are intertwined with a wide range of emotions for the parties involved in transferring management of the business from one generation to the next. This book does not answer the question of how best to resolve issues but rather tries to give the reader a basis for starting to deal with them.
The book is based on a survey conducted with the aim of shedding light on the difference in attitudes regarding soft issues in Danish family-owned companies. Added to this are perspectives gained from many years of experience working with succession plans.
Attorney Poul Jagd Mogensen (Accura); Lise Møller, (IMD, INSEAD, EY); Hans Eibe Sørensen (EIBE Consulting); and Christian Løche Andersen (M&A Frontline) have contributed to defining the issues. The Family Business Denmark association has provided support for the project.
With the book we aim to provide some help to families who are actively involved in company ownership with their efforts to initiate effective dialogues on the soft issues associated with an intergenerational succession. Finally, we hope that in this way we can contribute to the better handling of succession plans in family businesses.
We thank our respondents for their time and effort, as well as all our aforementioned collaborators.
Steen Haustrup & Andreas Munk Holm