The Relevance of Game Theory to Succession in Family Firms (Part II)

The second half of the paper provides many examples of the application of theory to the process of succession, which, without the expertise of a mathematician, appears visually in the form of many complex equations and is somewhat challenging to read. But even the authors note that although “the equations may seem a bit complicated, the real idea is to understand the outcomes of the analysis,” and therefore professional family business advisors need not wade through the equations in the paper in order to understand the relevance of the application...

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The Relevance of Game Theory to Succession in Family Firms (Part I)

In the article “Game Theory and Family Business Succession: an Introduction” by Timothy Mathews, Tim Blumentritt and Gaia Marchiso in the March 2013 issue of the journal Family Business Review, game theory is introduced as a framework through which to examine succession as a series of decisions about a family firm’s leadership, for the purpose of better-understanding the outcomes of succession events. Despite the complicated use of mathematical equations inherent in this theory, the authors make a strong case for the relevance of game theory and...

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HBR Study Identifies Key Factors for Successful CEO Transition

The article “Leadership Lessons from Great Family Businesses” published in the Harvard Business Review provides several practical suggestions for increasing the chances of a successful CEO transition process for family enterprises.  By analyzing 50 globally leading family firms with annual revenue above 500 million pounds and investigating the reasons behind their success, authors Fernández-Aráoz, Iqbal and Ritter explain that strong governance; a family focus; an openness to family and non-family members; and a structured, methodical...

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Family Culture as the Multi-Generational Glue: A Preview

    One of the basic objectives of advising family enterprises is to assist the family in creating a continuity plan that maintains the family as the “trans-generational engine” for wealth creation over multiple generations. Having achieved the FEA designation, I reflected on what it means to establish the family as the trans-generational engine for wealth creation over multiple generations. How do I, as a FEA designate assist families to achieve that goal? The legal tools I use are aimed at wealth and are not designed to create a...

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Researchers Assess the Meaning of ‘Value Creation’ in Family Firms

An article in the June 2015 issue of the Journal of Family Business Strategy, “Value creation in family firms: A model of fit,” investigates the convergence of goals, resources and governance in the family firm and how they can either create or destroy value over time. Value-creation in family firms is a commonly-debated issue amongst researchers and has led to several empirical studies and many publications arguing that family firms either have unique competitive advantages, superior financial performance, or alternately, unique disadvantages...

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Business Family Dynamics and the Continuity Process: Initiating the Conversation

Member Resource Series #1 The process of generational transition—also called “succession”or the “continuity process”—is the single most-talked-about issue in the area of family enterprise today. Business family members often delay addressing this complex challenge because of the type of conversations and decisions that need to take place with the future generation. Advisors want to help business families develop a plan but are equally apprehensive about broaching the topic of personal family relationships and associated dynamics with their...

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Fiscal Unequals and Household Philanthropy

Our blog post this week was written by Gena Rotstein, CEO of Dexterity Ventures Inc., and recent graduate of the Calgary FEA Program. Societal demographics are shifting. Women make up 50% of the North American population and almost the same for the workforce. A growing number of these women are taking on upper management roles (37% of upper management positions) 1 and as a result, women are becoming the primary bread-winner in a family. As such family dynamics and household financial management processes and norms are evolving. Various studies...

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Retaining Clients through Generational Transition

          This short article from Financial Advisor magazine may appear to be insignificant in the big picture but exemplifies a serious and noteworthy problem in the representation of professional advisors in mainstream media publications. Firstly, the article oversimplifies a complex subject which applies to most family enterprises, and secondly suggests that advisors incorporate multigenerational planning for the sole purpose of retaining clients or “assets” in the firm. Thirdly, it is not serving to contribute or...

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Commonly Held ‘Best Practices’ For Family Firms Are Not Necessarily True

Family Business Magazine’s article, Using and Abusing Family Business Research from the Autumn 2009 issue, is written by noted academic and family business researcher Joseph H. Astrachan. He has clearly outlined a number of key challenges for family businesses, and addresses whether or not scholarly research has proven solutions to these challenges, warning that “[a]necdotal evidence should be taken with a grain of salt.” Many of his points will come across as controversial to some family enterprise advisors or consultants. Key excerpts from...

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The Value of Trust – Study of Investor Services

This 2013 joint study “should be of great concern” to members of the investment profession, since it signals several fundamental problems in the financial services industry according to investors, and is threatening the very integrity of investment management and capital markets, according to authors of the study CFA Institute and Edelman.                Strong returns alone are not enough to earn trust on behalf of investors – and trusting an investment manager...

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Key Findings from STEP-IFB Engaging Advisors: Family Business Research

This joint research report from STEP and IFB provides insightful context and information about how advisors see family business clients and vice versa. While the sample of individuals was small, the summary of findings and implications for this research are important to the field of family enterprise and the further development of advisory services to business families. The report is a very realistic snapshot of challenges faced by family enterprise advisors and family businesses members. In some cases, the report makes valid points which are...

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Re-thinking Family Firm “Failure”

A synopsis of the FFI Practitioner post, Evolutionin Thinking About Generational Transition in Family Enterprises:  Dr. Pramodita Sharma, Sanders Professor for Family Business at the School of Business Administration, University of Vermont, writes that the commonly used 30-13-3 statistic (referring to the devolving chances of family enterprises succeeding to the next generation) is no longer serving the field of family enterprise because of its inaccuracy and constraint on the reality of family businesses today. Sharma cites a number...

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