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Hong Kong Tatler - - | Tatler Focus Hsbc Private Bank -

f you are plan­ning to hand over, what should you ex­pect? What do your suc­ces­sors need to know? And how can you en­sure an out­come that is good for the fam­ily, as well as for the busi­ness? Bernard Ren­nell, re­gional head of global pri­vate bank­ing, Asia Pacifc and global head of fam­ily gov­er­nance and fam­ily en­ter­prise suc­ces­sion at HSBC Pri­vate Bank shares some re­flec­tions from his more than 20 years’ work­ing with fam­ily busi­nesses:

Com­pany founders have of­ten given their lives to their busi­nesses. So nat­u­rally many feel pro­tec­tive and re­luc­tant to step back.

A good han­dover is cru­cial for the busi­ness, but it can also have a big im­pact on re­la­tion­ships within the fam­ily. Where there are sev­eral chil­dren who wish to be in­volved, some­one needs to de­cide who will take which role. There is al­ways the risk that some­one will feel left out.

The best suc­ces­sion plans are based on a cool-headed ap­praisal of the dif­fer­ent strengths and pref­er­ences of the next gen­er­a­tion of po­ten­tial lead­ers. That might mean favour­ing younger sib­lings over el­der sib­lings, skip­ping a gen­er­a­tion or go­ing out­side the fam­ily.

Many younger peo­ple want to re­fo­cus the fam­ily’s ex­ist­ing com­mu­nity in­vest­ments on one or two spe­cific is­sues that re­ally mat­ter to them. Of­ten they will look to take a more strate­gic ap­proach to phi­lan­thropy and to mea­sure the im­pact of their phil­an­thropic “in­vest­ments”.

Where the busi­ness has reached a cer­tain size, the founder might de­cide it needs the lead­er­ship of a sea­soned CEO from out­side the fam­ily—po­ten­tially dis­ap­point­ing chil­dren who had hoped to take over. But with good plan­ning the fam­ily can still be in­volved in other im­por­tant ways. Own­er­ship and man­age­ment are two dif­fer­ent things and of­fer dif­fer­ent ways of con­tribut­ing to the firm’s suc­cess. Fam­ily mem­bers can play an im­por­tant role in the com­pany’s suc­cess by be­ing good own­ers, putting in place strong gov­er­nance pro­cesses at the own­er­ship level.

When fam­ily firms change hands there is al­ways a risk of con­flict. Call­ing in a neu­tral third party with ex­pe­ri­ence of work­ing with fam­ily busi­nesses can pro­vide key fam­ily mem­bers with a chance to talk about their in­di­vid­ual views and as­pi­ra­tions. These dis­cus­sions are some­times emo­tional, and of­ten un­com­fort­able— but al­most al­ways help­ful in the end.

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