You can’t talk about business in Canada without talking about family businesses. The University of Alberta’s Family Business Institute notes family businesses generate about 60% of Canada’s GDP and create 20% of all new jobs in Canada. Clearly, family businesses are vital to our economy
Family members who go into business together are committed to each other, which fuels their dedication to the family business resulting in the success of the business. But they also have dynamics that make the long-term planning for a business more challenging. This includes the vital question of who will be in charge after the original owner or owners retire or pass on.
Every business has a hierarchy of owners and managers that relies on some combination of seniority, experience in specific areas, talent, and leadership. Families have their own hierarchies as well, which may incorporate factors that don’t necessarily coincide with business success, and might be impacted by sibling rivalries and conflicting personalities.
When family businesses set up their management structures, their family succession, and what’s best for the family might not necessarily be what’s best for the business, and this can cause family members to be at odds over these crucial issues.
Bringing in a lawyer to help determine family business succession when it first becomes a concern can keep it from becoming a dispute involving multiple lawyers later. When we work with families, we focus on honest, productive communication involving everyone who has a role in running the company, in order to construct a plan in the best interest of both the business and the family.
While it’s hard to arrive at a plan that will satisfy everyone completely and equally – especially if family members have conflicting goals for the business – a plan has a better chance of success if all family members have an opportunity to be heard and contribute to the plan. In our experience, having a lawyer who integrates everyone’s input into the plan, rather than one family member who takes charge and might put his or her agenda front and center, makes it more likely for family members to eventually come around to a plan they might not initially endorse.
Ultimately, settling issues about long-term goals and succession in the present can help families weather challenges – and keep their businesses operating – no matter what happens in the future. The discussions, though difficult, lead to a plan that protects the family business and its legacy.