When a business grows, the number of stakeholders also increases. External stakeholders of mature family businesses include banks, investors, suppliers, and employees. Additionally, second or third generation successors and family outsiders can be possible stakeholders.
A great involvement of stakeholders requires more openness, transparency and control all at the same time. These aspects often conflict with the traditional opaqueness of family businesses. Especially with larger family businesses, there is significant reluctance in providing financial data, to protect the interests of the family.
As a result, family businesses often have no external Supervisory Board to control management. Supervision is often still left to its own family relatives rather than an independent body, even though professional supervision today has become a necessity to family businesses. It helps the organization to stay focused and it simultaneously satisfies the public demand for greater transparency and control. Additionally, external supervision ensures that the company will be treated as a mature and professional organization which does not close itself off from the outside world.
Therefore, it is important to find a good balance in the existing governance, addressing both family values and the interests of the stakeholders. For the selection of supervisors, the whole set of requirements must be taken into account.
Clifton Finance has extensive experience in determining governance structure while maintaining family values. We analyse the desired objectives while taking family needs into account – including the needs of the next generation(s) – in order to create a sustainable governance structure.