Monday, February 2, 2015

How Family Enterprises have Changed, and the Implications for Professional Advisors

From the FFI Practitioner Blog, an audio interview with Drew Mendoza, managing principal of FBCG:

Drew will be sharing reflections about how a few of the constituencies of family enterprise systems have changed over the past 20 years and what that means for today’s practitioner. 2014 is the 20th anniversary of FBCG. He has done over 4500 client intakes and matched consultants with clients.


Q: What is the most profound change for the constituencies of family enterprise systems and of which practitioners should be aware?

·       must better informed, educated now as a result of educational opportunities widely available
·       as a result, there is increased awareness and interest in family and corporate governance
·       they are looking for ways to leverage interdependencies of these different systems

Q: What are a few of the practices consultants are employing today with an impact on future generations?

                  A: Education and next gen development, including:
·       intergenerational meetings, to strengthen a sense of identity for each generation
·       employment and compensation policies
·       career paths for next generation
·       preparing the next generation to be good owners and qualified directors – all of this could fit under shareholder education and next generation development

Q: Of the many constituents (non-family executives, next generation, long-term trusted advisors to the family, leading generation, new advisors to the family, operating owners, non-operating owners), what are some of the engagement practices consultants/practitioners employ today with a diverse client base?

A: We’re always looking for ways to feel heard, channel those communications to reach appropriate decision-makers. We respect the power of educated, informed shareholders who can draw on a common nomenclature, so everyone is using similar words that mean the same thing and working with a common sense of purpose.

Q: What are a few things that have endured that are important for today’s practitioner to keep top of mind? 

A: I would say the interrelationship between the various systems and the constituencies that make up those systems. I would include 1) the constants of procedural justice, so that people feel heard, and there are forums to be heard, and also 2) the importance of family and shareholder education and development.

Q: What thoughts do you have for the next generation, who wants to work in or with family enterprise?

A: It’s important for them to be conversant in the many areas they will likely be asked to consult on, and also have deep expertise in one or two of those areas. These can range from corporate governance, to family communication, to strategic planning, to finance, but also to be very well networked and respectful of the many professions who bring value and support to enterprising families. To not overreach on what you’re really best suited to be helping with.

Q: Do you have any other words of wisdom?

A: There are many professions serving enterprising families and I cannot speak for all of them. There are many independent sole practitioners in this space and I think it’s important for the future of the sector, particularly for consultants and those from 1-, 2- and 3-person organizations to go beyond the focus of their practice, to then also equally focus on their business, to have a strategic plan for their practices and also transition and continuity planning for those businesses.


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