Entrepreneurs: In Conversation with Benoît Frin
Benoît Frin
Estate Planning and Lending Director
@BNP Paribas Fortis Private Banking
From the commercial stand-point, leaders of family businesses worry about the difficulties of making sound strategic decisions when the direction is not well-defined: this is when dissenting views are likely to emerge. A majority (57%) of entrepreneurs believe that a family governance code could address this risk by clarifying the long-term strategy. A codified approach is particularly relevant to business owners living in Belgium, Taiwan, Poland, Singapore and China, where more than seven out of ten are driven by this motivation.
However, the personal perspective is never far from their minds and they think carefully about how to pull together talent from different generations. Fifty-seven percent of entrepreneurs who are considering a governance code say it will help them successfully integrate different family members into the firm. This is the single most important driver for business owners in the US, for example.
Entrepreneurs running family businesses know that there is potential for discord in their firm, just like in any other. Their valuable legacy to the next generation of leaders is to address these risks proactively through a codified approach to governance.
Mr Frin adds:
B.F. “Many people think family governance has to be implemented just before business transfer to the next generation. In reality, it should be implemented far in advance. If you leave the question of family business governance too close to the transfer of the company, you will have tension within the next generation, which can influence the sale of the company to a third party, not necessarily at the best price. Planning ahead on governance allows the company to continue under the control of the next generation, according to their personal and new vision, without too much friction between the family members and branches; or to be sold in a better condition."
Motivations for putting in place family governance
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Reflecting on his experiences of supporting family business entrepreneurs, Mr Frin says:
B.F. “My first question to family members is: who do they want involved in the future of the company? Secondly, I ask all the members of the family, not only the active shareholders but also the passive shareholders, what are your objectives for the company? Where do you see it going in future? Will it have a local focus or national, international? In which markets? It’s very important that we discuss as much information as possible, with ideas coming from family members; not advisors, but rather the younger and older generations in order to strike a balance between different family interests.”