Private Company Issues and Opportunities 2020

Private company issues and opportunities 2020
Family business edition

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited,
its member firms, or its and their affiliates are, by means of this publication, rendering accounting,
business, financial, investment, legal, tax, or other professional advice or services. This publication
is not a substitute for such professional advice or services, nor should it be used as a basis for any
decision or action that may affect your finances or your business. Before making any decision or
taking any action that may affect your finances or your business, you should consult a qualified
professional adviser.
None of Deloitte Touche Tohmatsu Limited, its member firms, or its and their respective affiliates
shall be responsible for any loss whatsoever sustained by any person who relies on this publication.
Contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Family business and purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Assessing the health of family businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Zoom out to zoom in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Good family governance: Driven by good family communication . . . . . . 18
Aligning family and business strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Access to capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Social responsibility: Why family businesses give back. . . . . . . . . . . . . . . . 30
Family businesses and the future of work. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Ecosystems and innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Cyber risk for family businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Preserving family capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Succession planning: Regional perspectives. . . . . . . . . . . . . . . . . . . . . . . . . 50
3
This page has been intentionally left blank.
Executive summary
Family is one of the most evocative words in any language. It conjures up thoughts of love,
strength, support, and special bonds, but also of conflict, tension, and drama. Nurturing the
positive side of this equation takes effort and dedication. While this can be challenging for any
family, those in business together must work doubly hard to achieve long-lasting harmony.
Few family businesses survive into the third and fourth generations, and oftentimes the culprit is
misalignment between the goals, wants, and needs of the business and individual family members.
In this report, we examine the common traits of family businesses around the globe that have
solved this puzzle. Articles from Deloitte practitioners who work with family businesses
provide useful insights on topics ranging from succession to social responsibility, from preserving
Carl Allegretti
family capital to assessing the health of family businesses, and from innovation to
the future of work.
What we found is that successful family businesses tend to have one quality in common: a sense
of purpose beyond being profitable. Of course, making enough money to sustain a business is as
important to family-owned concerns as it is to any other commercial enterprise. But they are also
driven by unique pursuits that, for many, will define their legacies for years to come. Whether
it’s a commitment to giving back to their community, becoming environmentally sustainable, or
producing a perfectly crafted product, purpose informs everything they do. Our opening chapter
covers this theme, examining some of the cultural and regional differences between family
businesses young and old in finding and fulfilling their purpose.
We often talk about how important family businesses are to the economies in which they operate William Chou
and prosper; however, delivering on these non-economic aims may be the most influential
impact they have on society. As globalization and the pace of technological change disrupt
business as usual, how family businesses retain and project their sense of purpose could make
the difference—not only in how they sustain themselves and prosper, but also in the way their
contributions will be recognized and remembered.
Carl Allegretti William Chou

Global Deloitte Private Leader Global Deloitte Private Family Business Leader
Deloitte LLP Deloitte China
5
Family business
and purpose
William Chou
Deloitte Private global family business leader
6
Off the northwest coast of Japan, there is a family business that’s
been around longer than nearly every part of the landscape that
surrounds it, except the ancient cedar trees and a Buddhist temple built
in 717. The Hoshi Ryokan is a small inn that is one of the world’s oldest
independent family businesses, created just one year after the temple
and currently closing in on 50 generations of ownership.
For the Hoshi family, its identity and that spectrum, from customers to employees family business that has survived three
of the hotel are inseparable, connected by to people in the places where the generations. In the United States, fewer
a longstanding commitment to nurturing businesses operate. than 30 percent of family- and founder-
a business and legacy of 1,302 years— owned businesses endure past the second
and counting.1 It’s a concept that is finally getting its generation as family-owned businesses.3
due among some of the largest public On its face, the problem is one of
For many family businesses operating in companies in the world. In August 2019, succession. But there are many underlying
Asia, the Hoshi Ryokan represents the chief executive officers from 181 of the symptoms that can create succession
ideal—a successful business perpetuated biggest US multinationals issued an open issues, and one of the most influential
by each generation, with no end in sight. letter titled “Statement on the Purpose of is a lack of purpose that unifies different
Family is the key element in Asian culture. a Corporation.” In it, they recognized that generations within a family.
Everyone wants his or her legacy to each of their stakeholders is essential, not
pass on from the first generation to the just the shareholders in their companies. Every family business, when it’s established,
second and third generations and on “We commit to deliver value to all of them, must have a purpose, and it must live
down. Therefore, the number-one purpose for the future success of our companies, our this purpose from the first generation to
for most family businesses here is the communities and our country,” they wrote.2 many generations to come. When that
continuity of the family. doesn’t happen, it’s typically because family
The letter represented a major break from members have different intentions or ideas
No matter where a family business resides the longstanding economic principle that about their individual purpose.
and operates, it likely has a purpose that the sole focus of a business is to maximize
extends beyond profit-making. Culture, profits for the benefit of shareholders. But This dynamic used to be mainly confined
heritage, tradition, community, innovation— for family-business leaders, this change to large, developed economies in the West,
these are some of the words you hear when in thinking may have felt overdue. For where younger family members traditionally
you ask family-business owners what really them, purpose has always meant building have gone off to college and then formed
drives them. Yes, profits are needed to something greater than themselves. their own households and built their
sustain family businesses, but they derive own careers. This separation gave rise to
at least in part by a sense of purpose that The third-generation problem independent thinking and new ideas, not
resonates with stakeholders across the Around the world, it’s rare to find a just about the family business, but also
about other potential career paths.
7
By contrast, families in the East traditionally surveyed say social enterprise issues
live together for much longer periods, are more important to their organizations
with multiple generations commonly living than they were three years ago, and
under one roof; however, that is beginning 56 percent say they expect them to be
to change now that globalization and even more important three years from
technology are contributing to a world that now.4 Societal impact and ethics are the
is becoming smaller and smaller. most common reasons why millennials
—not just customers, but employees
In many ways, mainland China is at the too—are changing their relationship
epicentre of this culture shift. Although the with businesses.
country is thousands of years old, many of
its family businesses were started only a For their part, family businesses have an
generation ago after the end of the Cultural opportunity to deliver social impact not just
Purpose Revolution. The wealth they have created

has allowed them to send their children
through their business, but also through the
family foundations made possible by their
for a family
to be educated overseas, and they are financial success.
returning home with different perspectives
and priorities. Of course, purpose doesn’t have to be so
business high-minded. It can be about maintaining
In one case, a business owner I know in a tradition or a core set of values. It can be
is not just China sent his only son to study abroad in
Australia, where he ended up living for 20
about identifying with a place: there are
countless scores of family businesses that
about the years. The father wants his son to succeed

him in the business, but the son doesn’t
wouldn’t think of leaving their communities,
their identities intertwined with the towns
purpose of feel like that’s an attractive opportunity for

him. It’s become a conflict between Eastern
where they were created and found
success. Purpose can also be about
the business; culture and Western culture. something as straightforward as superior

customer service or craftsmanship.
it is also
Bridging the divide
A clear purpose is fundamental to any Starting and sustaining the
family business, and those with the conversation
about the strongest sense of purpose are often Whatever a family business’s purpose is,
the most successful. Purpose for a family open communication is critical. Individual
purpose of business is not just about the purpose of
the business; it is also about the purpose
family members need to share their
personal aspirations as a starting point for
the family. of the family and defining how it fits in with

the enterprise and establishing why family
any family conversation about values, vision
and purpose. When the business does
members are in business together in the something that runs counter to the family’s
first place. priorities, there needs to be a governance
process for addressing it.
For some, that purpose is serving as a role
model for others by generating a positive To be sure, holding a meaningful discussion
social impact. In Deloitte’s 2019 Global on the purpose of a family business can be
Human Capital Trends report, 44 percent difficult, especially when there are multiple
of business and human resources leaders generations involved who have different
8
life experiences and perspectives. “Study the water” Notes
But these conversations might yield insights With the world changing so much 1 Morten Bennedsen, “Centuries-old Japanese
that can transform a company’s legacy, these days—due to the rapid pace of family-owned inn a model for succession,”
South China Morning Post, February 28, 2014,
help generations settle conflicts, and technological change, globalization, and the https://www.scmp.com/business/companies/
find a healthy balance between tradition flow of information across borders—it pays article/1436947/centuries-old-japanese-family-
and innovation. With successful family to be nimble. But for family businesses, owned-inn-model-succession.
businesses, older and younger generations rooting themselves with a defined purpose 2 Open letter, “Statement on the Purpose of a
Corporation,” Business Roundtable, August 19,
are always in a process of alignment and can prove to be a stabilizing process.
2019, https://www.businessroundtable.org/
debate about their purpose. Consider the example of the Hoshi family business-roundtable-redefines-the-purpose-
from Japan, whose philosophy all along has of-a-corporation-to-promote-an-economy-that-
serves-all-americans.
One example is Lee Kum Kee, a family been, “study the water running down
business more than 130 years old in a small current.” 3 Catherine Schnaubelt, “Transitioning Your
Family Business To The Next Generation,”
China’s Guangdong Province that invented Forbes, August 17, 2018, https://www.forbes.
and built an empire based on oyster sauce. In China, we like to say, “the strongest com/sites/catherineschnaubelt/2018/08/17/
The company introduced a comprehensive surface is not necessarily the hardest.” transitioning-your-family-business-to-the-next-
generation/#52d8880e7421
governance system in the early 2000s after When you have water go over a stone for
4 Erica Volini, Jeff Schwartz, Indranil Roy, Maren
some family disagreements nearly ended 1,000 years, it will eventually cut a hole
Hauptmann, Yves Van Durme, Brad Denny, and
its reign. The family’s leaders turned certain through it. Family business is much the Josh Bersin, “Introduction: Leading the social
business units into a training ground for same. If you want to preserve value and be enterprise—Reinvent with a human focus,” 2019
Global Human Capital Trends, Deloitte LLP, April
younger family members, who were sent the best of the best, it’s not about being
2019, https://www2.deloitte.com/us/en/insights/
on “innovation trips” around the world to the quickest to change. It’s about being the focus/human-capital-trends/2019/leading-social-
bring back fresh thinking.5 most enduring. enterprise.html.
5 “How Hong Kong oyster sauce dynasty plans a
In this case, the core business remains the 1,000- year reign: a case study for Asia’s ultra
rich,” South China Morning Post, August 31, 2019,
same, but the younger family members https://www.scmp.com/lifestyle/food-drink/
helped them introduce new sauces and article/3025060/how-hong-kong-oyster-sauce-
packaging. They found their purpose and dynasty-plans-1000-year-reign-case.
it’s one of the main reasons the company is

now in its fifth generation.
9
Assessing the health

of family businesses
Larry Keeley
President and co-founder of Doblin, a Deloitte business
10
You don’t have to look too far to find examples of extremely successful
family businesses that have stumbled or fallen apart due to conflict or
strife within the family. Multibillion-dollar enterprises have been split up
and sold off over family quarrels that metastasized and undermined those
who remained keenly focused on the company’s success.
But even when family businesses find a way and/or leadership brought in from When such conflicts can’t be remedied
to sustain themselves, they can fail to make outside. As more family members become internally, it’s common for the family
the most of their potential due to inner involved, natural tensions emerge across to bring in outsiders to take over the
conflicts. Family turmoil can stem from generations. When a family creates a wildly company’s management. The outsiders
differences of opinion about the company’s successful platform business, there’s a lot might have the perfect credentials for the
strategy or change in leadership, but it can of money at stake and tensions can job, but they don’t have enough information
also arise from behind-the-scenes personal become intensified. about the family dynamics that led to the
issues that have little to do with running trouble in the first place. If they ignore
the business. That’s particularly true of businesses that that context, they do so at their own and
need to innovate or shift their model to the company’s peril. In those cases, the
Whether a family is involved in the day-to- keep growing. Older family members who business tends to cycle through a series
day operations of the business or simply guided the business through its formative of CEOs, consultants, and other leaders in
retains a controlling stake, these family decades and are emotionally attached to rapid succession, and the real issues are
health issues can derail legacies and it tend to discount the opinions of younger never addressed.
erode wealth over generations. And, generations when it comes to new, tech-
in many cases, they’re treatable. We driven business initiatives. For example, Even when family members understand
have yet to find dysfunction in a family the “old guard” might push back based that they have a problem that is inhibiting
business that can’t be explained by on previous projects that didn’t work and the business, it can be difficult to address
some combination of identifiable factors. wasted money. Interestingly, successful it. In certain regions of the world, such as
Predictive analytics can show families family members tend to have a quality the Asia, younger generations tend to defer to
where their weaknesses are likely to lead less successful ones don’t: humility. Their their elders and look to avoid any conflict.
if they aren’t promptly addressed. experience has taught them to be more In Europe, by contrast, a family’s reputation
careful and not take success for granted. can dominate other considerations,
Issues In many cases, it can be difficult to find arguing for keeping problematic facts
At some point in their history, many family common ground between these divergent confidential rather than subjecting them to
businesses migrate from startups with a perspectives. It’s within those generational a public airing.
single founder to sprawling enterprises divides where the dysfunction can be
managed by a host of family members particularly acute.
11
Opportunities Family businesses should consider

Family businesses don’t need to wait undergoing a diagnostic assessment that
for a public dust-up or other failure to pools a variety of perspectives from family
obtain a true sense of their strengths and and non-family members—from 20 to 50
weaknesses. Typically, an objective look at contributors—to get a truer sense of what
the business from inside and out can point they’re doing right and wrong. For many
to the reasons for its success and areas companies that go through such a process,
where it can improve. it’s the first time family members share
their perceptions—and are exposed to the
Many dimensions of running a family perceptions of others—about problems long
business are interrelated, meaning an issue deemed to be holding back the business.
that’s impacting the health of the family Much like a patient’s health record in the
could explain why a part of the business hospital, an assessment provides a way to
Much like a is suffering, and vice versa. For instance,

a lack of confidence in the ability of a
be more objective about the issues a family
may be dealing with and to get it down all in
patient’s health
family’s younger generation to contribute one place. This can be particularly important
to innovation discussions can affect when a family business is undergoing a
performance and succession issues down leadership succession.
record in the the road. In another family, a lack of clear
boundaries for the roles and responsibilities New predictive analytical tools can make
hospital, an that family members take on can upset
non-family members in the business and
these exercises more fruitful. By drawing
on the experiences of other companies and
assessment promote a sense of unfairness. how their experiences aligned with their
scores, the results from the diagnostic can
provides a way project likely outcomes for family businesses

that rate high or low among certain family
to be more and business factors. As patterns start to

emerge, businesses can start to get ahead of
objective about
potential trouble spots or replicate success.
the issues a
family may be
dealing with.
12
Questions to consider:
• Are there meaningful differences of opinion
at your company about the role of family
and non-family members in running or
overseeing the family business?
• Have internal family conflicts kept your
business from pursuing new growth
opportunities or contributed to
high-profile missteps?
• Does your family business have clear lines
of authority that are inclusive and exclusive
where necessary to promote the success of
the business?
• Do you embrace an environment of
openness between family members of
different generations when identifying
potentially emotional obstacles
to communication?
• Have you done anything to objectively
assess the strengths and weaknesses of
the family, as well as the strengths and
weaknesses of the businesses run by
the family?
13
Zoom out
to zoom in
John Hagel
Co-chairman, Center for the Edge, Deloitte LLP
14
Examine the most successful technology companies in Silicon Valley, and
you will find that they often have a very different approach to strategy
compared to their more traditional counterparts. As part of their regular
planning meetings, they constantly ask themselves what their market or
industry will look like 10 to 20 years from now and what kind of company
they need to be when that time arrives.
The next part is critical: The answers to Issues As a result, these businesses focus on
these questions help set their investment While family businesses express confidence trying to respond as quickly as possible to
priorities for the next six to 12 months. in their preparedness for the future, many events as they occur, increasingly spreading
This “zoom out to zoom in” approach may be overconfident given where they their resources more thinly across an
effectively cures company leaders of their spend the bulk of their time. Deloitte’s ever-expanding array of initiatives.
development-driven, short-term myopia global family business survey found that
and clears the way for them to think more more than half of respondents believe In some ways, the same traits that have
proactively about the future so their they have the right strategy to meet the come to define small businesses can
businesses can carve out a meaningful challenges of the next two decades.3 also contribute to short-term myopia
role in it.1 But when it comes to formal planning and complacency. One such defining
processes, they don’t think that far ahead, characteristic is resilience. Family
Despite having inherent advantages that and rarely beyond the next five years. They businesses have been found to enjoy higher
lend themselves to adopting a similar might hold an off-site meeting once a year in survival rates during severe economic
“zoom out/zoom in” approach, most family which employees are asked to envision the downturns, as they demonstrate the ability
businesses remain focused on the here and future and what it might look like, but once to bounce back more quickly than their
now. When they do plan for the future, their they return to work, those freewheeling non-family counterparts.4 This experience
vision of the horizon is limited. In Deloitte discussions often don’t translate into can feed a belief among family leaders that
Private’s Long-term goals, meeting short-term concrete action. they need to stay on their present heading,
drive: Global family business survey 2019, since it’s served them so well in the past.
71 percent of respondents report their Things are changing so rapidly that family They may say, “failure breeds success,” but
company plans for only the next two to five businesses often find themselves getting success can also breed failure. The more
years, while another 6 percent don’t look swamped by what’s happening today. It successful you are, the more complacent
past next year.2 You can’t really understand can consume all of their attention. They get you can become, and not recognize that
exponential change if you’re just focused distracted by what’s going on that moment things are changing at a more fundamental
on what’s changing from day to day. By and lose sight of where they’re going and level than you think.
zooming out to zoom in, family businesses what they’re trying to accomplish.
can drive disruption rather than be a
victim of it.
15
Family businesses have also historically can take to achieve the future envisioned.
benefited from loyal customer bases,5 It’s vital that senior leaders agree on two to
which may not be as much of a given now three of the highest-impact initiatives that
that consumers have 24/7 access to price can be pursued within the next year and
comparisons, customer reviews, and other dedicate appropriate resources to them.
information, and can just as easily shift That makes a theoretical exercise become
to a competing product or service. Those real. Clear marching orders emerge for what
companies included in this year’s global the company will be doing differently in the
family business survey seem well apprised short term to build the capabilities they will
of this issue: Only 21 percent believe that need in the future.
customer loyalty will drive their business’s
sustainability in the years to come.6 The zoom out/zoom in approach can work
for any company, but family businesses may
The zoom out/ Opportunities

Rather than take a one- to five-year view
be primed to benefit more than most. One
reason is that at many family businesses,
zoom in
of the competitive landscape, family the leadership remains intact for many
businesses should consider a different years. At the average public company,
tactic. Companies pursuing a zoom out/ the median tenure of a chief executive
approach zoom in approach spend almost all of their officer has shrunk to just five years. That
time concerned with both the 10- to 20-year means any major investment initiatives
can work for horizon and the six- to 12- month horizon,
figuring if they get that balance right,
they approve could be easily upended
as soon as someone else is in charge. In
any company, everything else will take care of itself. contrast, family-business leaders and their
family successors can see those spending
but family The 10- to 20-year time frame is far long

enough that it’s difficult to envision an
priorities through to their conclusion.
businesses unchanged future, particularly given the

current pace of technological change. As
The question for them is, “How do I
prepare something really big for the next
may be
they ponder what that future might look generation?’’ This approach lets them focus
like, the leadership team works to build on what really matters—and that’s the big
alignment around a shared view of the legacy-creating opportunities.
primed to future, using scenario-planning techniques
and outside experts to help challenge their Our team studied one longstanding Chinese
benefit more key assumptions. family-run company that engaged in a
similar, less formal exercise back in the
than most. Then the focus shifts back to the immediate

term, and what tangible steps the business
1970s. Li & Fung had succeeded for
70 years by serving as a deal-making
16
broker for apparel manufacturers and through the organization’s hierarchy under Notes
other export companies looking to sell a prescribed set of practices and career 1 John Hagel and John Seely Brown, “Zoom out/
their goods to the United States and paths, without much input on strategic Zoom in: An alternative approach to strategy in
a world that defies prediction,” Deloitte Center
Europe. After two brothers took over the direction. The younger generation can for the Edge, 2018, https://www2.deloitte.com/
company in the mid-1970s, they noticed serve as a challenging force to at least content/dam/insights/us/articles/4615_Zoom-out-
the business’s commissions were shrinking. bring in a different set of experiences and zoom-in/DI_Zoom-out-zoom-in.pdf.
They studied the global apparel industry perspectives. They’re the ones who are 2 Long-term goals, meet short-term drive: Global family
business survey 2019, Deloitte, June 2019, https://
and considered how it might continue to going to ask, “Wait a minute, is this really
www2.deloitte.com/content/dam/insights/us/
evolve over the next 10 years. going to work as well in the future as it has articles/r7-12011_long-term-goals-meet-short-
in the past?” term-drive-family-business-survey2019/DI_Long-
term-goals-meet-short-term-drive.pdf.
What they saw was increasing complexity
and competition, as well as an opportunity Questions to consider: 3 Global family business survey 2019, Deloitte.
to become a trusted adviser who • Do we have a formal process for 4 Saim Kashmiri and Vijay Mahajan, “Why Family
Businesses Come Roaring out of Recessions,”
could help its clients orchestrate their envisioning the future?
Harvard Business Review, April 7, 2014, https://
resources up and down their supply • How far ahead are we willing to look as an hbr.org/2014/04/why-family-businesses-come-
chains. They fundamentally transformed organization to get ahead of meaningful roaring-out-of-recessions.
their organization as a result, starting in shifts in our business? 5 Carrie Hall and Joseph Astrachan, “Study:
a focused way with a new business unit • What will our relevant market or industry Customers Really Do Trust Family Businesses
More,” Harvard Business Review, April 27, 2015,
targeting one apparel designer before look like 10 to 20 years from now? https://hbr.org/2015/04/study-customers-really-
scaling up dramatically. Today, Li & Fung has • What kind of business family will we do-trust-family-businesses-more.
over 250 offices in 40 markets worldwide, need to be 10 to 20 years from now to be 6 Global family business survey 2019, Deloitte.
working with 15,000 suppliers and servicing successful in our market or industry? 7 Suzanne Kapner, “The Unstoppable Fung
8,000 customers.7 • What are the two to three initiatives that Brothers,” Fortune, December 9, 2009, https://
we could pursue in the next six to archive.fortune.com/2009/12/07/news/
international/li_fung.fortune/index.htm.
There’s another benefit to applying the 12 months that would have the greatest
zoom out/zoom in framework: engaging impact in accelerating our movement
in the process younger generations toward that destination?
who will be called on one day to assume • Which voices, both within and outside the
leadership responsibilities. Typically, organization, do we need to incorporate
younger family members have risen in this kind of scenario-planning to ensure
we are getting a mix of perspectives?
17
Good family governance:

Driven by good family communication
Michelle Osry
Partner and family enterprise consulting practice leader, Deloitte Canada
18
Communication is probably the single most important ingredient in
building and managing a successful family enterprise, but it often proves
to be the most difficult part.
Open, honest, and productive Fortunately, effective family communication • Unlike non-family businesses, emotions
communication can be a challenge for any can be learned, and today we see more and personal feelings can’t be left at
organization, but for a family enterprise it and more families committing time and the boardroom or office door, and
can be particularly difficult. By their nature, budget to facilitate and improve their personal and private values, beliefs and
family enterprises are complex, and as they communication skills and capabilities. personalities matter. Not being able to
evolve past the first-generation founder- discuss and resolve an issue with a parent,
manager, business and family issues Issues spouse, sibling, or cousin who may or may
become intertwined, especially as the Communication across a family enterprise not also be an executive or shareholder
enterprise transitions from the generation can be difficult for a number of reasons: can leave a family feeling stuck and
of sibling owners and managers to the • Family members will have different confounded. As a consequence, business
generation after that, of cousins. interests, different aspirations, and decisions may seize up, opportunities
sometimes different values. Overlapping may be squandered, and blame can set
In our family enterprise practice, we roles and responsibilities, combined with in, dividing the family and the business,
consistently see that good family management, ownership, and economic unfortunately sometimes to the extent of
governance relies on open and transparent interests, provide fertile ground for family estrangement and business failure.
communication, but that business families misunderstandings and conflict. Lacking • As the business and family grow, more
quite often lack the skills and capability methods to navigate complex and tough and more family members expect a say
to navigate tough discussions together, discussions, families become vulnerable to or voice in the enterprise. Apportioning
particularly those involving both business the business, and vice versa. questions and decisions between the
and family matters. Rather than risk family • A lack of transparency in family matters is family, the business, and the shareholders
disagreement, business families often quite normal, and so it is easy for family sometimes requires difficult discussions.
default to avoiding difficult or sensitive members, especially those not involved Trustees, enterprise executives, board
conversations. But we know that allowing in the management of the business, members, and beneficiaries are often the
management, succession, and ownership to misinterpret information received same people. We see too often that when
discussions to slide can place not only the informally. It can be difficult to speak truth processes and structures are forced on
business but the owning family at risk. to power in hierarchical family business family recipients, dispute is inevitable.
Indeed, research and practice show time cultures. Differing levels of knowledge,
and again that breakdown in communication authority, ownership, and responsibility, Building a family’s communication skills
is largely the cause of transition failures in plus tensions and biases between takes time and effort. But we consistently
family-owned enterprises. generations have real impact. see that good communication is ultimately
what sets successful business families apart.
19
Opportunities Successful multigenerational family

Despite their complexities, family enterprises are then able to direct
enterprises have significant advantages conversations and decisions to the
over their non-family counterparts. appropriate governance forum. We find
Through being brought up in the business, it useful to visualize family enterprise
family owners have a unique and superior governance as a process of building out
ability to adapt and pivot, particularly when different rooms in a house, each fit for a
guided and sustained by the family’s vision distinct purpose.1 Different conversations
and values. and decisions are made in each room.
For example, the family council is the
To capitalize on this strategic advantage, forum for discussing ownership and family
we encourage business families to invest matters, as well as family education and
in building their communication skills as philanthropy. The business board meets to
We find it an integral part of their overall practice

of governance. Meaningful, sustainable
oversee the performance of management,
and to review, approve, and monitor the
useful to
communication takes patience to set out, business’s strategic plan. These governance
and a commitment by all family members to bodies are not just checkboxes or rubber-
engage with open minds and open hearts. stamp exchanges. Each forum requires a
visualize family Working with a neutral family-enterprise unique set of skills to deal with a unique
adviser may help to level the power-playing set of issues.
enterprise field, so that all family members feel they
can have a voice at the table. Importantly, a Understanding, defining, and attending
governance structured approach allows difficult issues

to be worked through in a sensitive and
to family dynamics are vital for the good
functioning of a family enterprise’s
as a process productive way, allowing a family to heal

and reset past behavioural patterns.
governing bodies. Underlying everything is
the recognition that good communication
of building Working through the mandate and

is both an art and a science. The fields of
neuro-cognition—how the brain works—
out different
decision-making authorities of a family and systems thinking—the notion that
board or council, in contrast to the everything is interconnected—offer much
business board or shareholders’ council, for family enterprises:
rooms in a is another facet of the work required.
house, each fit

for a distinct
purpose.
20
• Identifying and addressing generational, Questions to consider:
cultural, and gender biases and • How well does our family communicate
emotional triggers. about family and business matters? Can it
• Listening empathetically, asking genuinely be improved?
open-ended questions, and accepting that • How effective are our governance
we all come to any conversation with structures in meeting the family’s needs
our own story and assumptions are for what really matters? Do we have the
learned skills. right governance bodies in place for the
• Practicalities are important, such as current stage of our family enterprise, or
scheduling family meetings in a neutral must they evolve?
location, having ground rules that
differentiate them from family gatherings,
and ensuring that participants are Note
prepared by a facilitator to attend 1 Josh Baron, Rob Lachenauer, and Sebastian
briefed and present. Ehrensberger, “Making better decisions in
your family business,” Harvard Business Review,
• We find that family leaders often need September 8, 2015, https://hbr.org/2015/09/
to invest one-on-one time with family making-better-decisions-in-your-family-business.
members, especially those who are more
withdrawn or less likely to speak up
during group gatherings, to build trust
and understanding of the value of a family
program to them. Those leaders may
also need to recognize that as they open
lines of communications, they may be
challenged in ways they aren’t used to.
Once a family begins to communicate

effectively, it begins to lay a foundation
for transparency, fairness, accountability,
and participation. Getting it right might
take years of evolution and requires
courage and commitment. Missteps and
miscommunication are part of the
process, so it also requires love, practice,
and patience.
21
Aligning family
and business strategy
Frank Leggio
Partner, Deloitte & Touche LLP, US family business leader
Alejandro Mendez
Family enterprise leader, Deloitte Mexico
22
Psychologists define attitude alignment as the concept of modifying one’s
opinion to agree with others. This is especially true in close relationships,
when parties have different views but are motivated to change their
opinions to match those of their counterparts.1
In family-owned businesses, shared values, A frequent discussion for families involves Third-party perspectives can help bring
vision, and culture are among the traits risk tolerance. Our global family business founders and owners into alignment with
we attribute to entrepreneurial success. survey indicates that some firms are their successors on the future of the firm.
But our research suggests there appears inclined to be risk-averse. As a result, they Next-generation leaders have a tough job,
to be little alignment between personal are unwilling to innovate for fear of potential and advisory boards can help them with
preferences and overall business strategy negative outcomes, such as a reduction in issues the founders never had to deal
in many of these firms. In Deloitte’s family wealth.4 Regarding specific risks, with when they started the company. It’s a
Global family business survey 2019, only they sometimes view partnerships or different world. The competitive landscape,
35 percent of respondents say company joint-venture opportunities with skepticism. multinational customers, multinational
objectives align with family goals.2 A lack supply chains, and speed of technological
of harmony can lead to disagreements Family-owned companies are by nature disruption—younger generations are
in any organization. But in family-owned entrepreneurial, innovative, and risk-taking. inheriting these businesses and they
businesses, the absence of alignment But they’re careful to protect the things that need a different type of support to make
between individuals and the business can made them successful. them successful.
become a threat to performance, growth,
and longevity. Another area where family goals may not Opportunities
align with company objectives concerns One opportunity for firms to align
Issues the value of third-party advice. Many family and business strategy is through
Decision-making in family businesses often family businesses have been operating for meaningful conversations about their
depends on factors beyond immediate decades without the benefit of advisory values. In this year’s family business survey,
results and financial success. These boards; however, the perspective these just 11 percent of respondents cite shared
businesses make decisions based on the external boards provide can not only help values and ethos of the family as one of
family legacy, and that influence can endure bridge interpersonal differences about the the key characteristics that will drive the
for generations to come.3 One key issue direction of the business, but also help the sustainability of their firms over the next
that can prevent the alignment of family company plan for the transitions that will 10 to 20 years. In addition, fewer than
and business strategy is communication inevitably come with a change in leadership. one-third of respondents say there’s full
avoidance; many family companies aren’t agreement within the family about the
prepared for difficult conversations or avoid development of the company over the
such discussions altogether. next one to two decades.5
23
If family-owned companies want to make Another opportunity for family-owned

sure that business strategy aligns with businesses is to bring their teams into
family objectives, they should first work alignment around agile business practices
collaboratively to define their values that allow the company to respond quickly
and communicate those principles to to changes in their industry. In the Deloitte’s
the organization. It doesn’t matter if the 2019 family business survey, 61 percent of
company is 30, 50, or 80 years old. Being respondents say agility is the most crucial
in business for decades is not a strategy. attribute of a family business. Respondents
Businesses need a process to see where perceive agility, along with other distinctive
they want to be in in the next 10 to 20 years. features—such as innovation capabilities
(39 percent) and financial position
Another consideration for family businesses (32 percent)—as essential to sustaining
is to seek alignment on a wealth strategy, their business.6
It doesn’t specifically determining how wealth

preservation will be managed. For example, Ideally, discussions around innovation
matter if the
a company that goes from $100,000 in should involve all generations in the
revenue to $200 million will need a chief company. Ultimately, it’s up to owners
financial officer who can handle more to communicate to the family how these
company is 30, complex transactions and a chief operating capabilities fit into the direction and goals
officer who can manage a growing business of the business. Family-owned businesses
50, or 80 years and the wealth it generates. have a unique opportunity in this
respect—acquiring new skills that help the
old; being in There are some basic questions for family

businesses to ask, including: How are
company operate like a larger firm without
the bureaucracy that could leave the
business for we going to preserve family wealth for

three or four generations? What’s the
organization feeling impersonal.
decades is not strategy in terms of investment, in terms of

distribution? How are we going to educate
For people who innovated, created a
business, and grew it into something that’s
a strategy.
the next generation to be entrepreneurial? much larger, their perseverance got them
to where they are today. But now, business
is so much more complicated. It’s a different
economic environment. It means that
family businesses need to have more
structure, governance, and discipline to
perpetuate that growth.
24
Questions to consider: Notes
• Have you defined and communicated your 1 Jody L. Davis and Caryl E. Rusbult, “Attitude
family’s values? Alignment in Close Relationships,” Journal of
Personality and Social Psychology, 2001, Vol. 81, No.
• How can you customize your governance 1, 65-84, https://pdfs.semanticscholar.org/ca87/
model to address your ever-changing d69bc99ee5707332b5b232fa86f642a20938.pdf.
business and family issues? 2 Long-term goals, meet short-term drive: Global family
• Are you and the generations immediately business survey 2019, Deloitte, https://www2.
deloitte.com/content/dam/insights/us/articles/
following you prepared for the rapidly
r7-12011_long-term-goals-meet-short-term-drive-
increasing disruption cycles that will define family-business-survey2019/DI_Long-term-goals-
the future? meet-short-term-drive.pdf
• Can you define a common vision for the 3 Pietro Gottardo and Anna Maria Moisello,
future? Does it align with the interests of “The impact of socioemotional wealth on family
firms’ financial performance,” Problems and
the family and the business? Perspectives in Management, 13(1), 67-77 2015,
• What are the roles and responsibilities of https://businessperspectives.org/images/pdf/
each member of the family, particularly applications/publishing/templates/article/
assets/6331/PPM_2015_01_Gottardo.pdf.
those who will serve in leadership roles?
4 Global family business survey 2019, Deloitte.
• How will you educate successive
generations on business management? 5 Ibid.
6 Ibid.
25
£ €¥
€
W
W€
$
¥ $ £
¢
Access to capital
Robert Olsen
Global Deloitte Private financial advisory leader and partner, Deloitte Canada
Akihito Aihara
Co-leader, Deloitte Private family advisory practice, Deloitte Japan
26
Like all businesses, family-held concerns often find themselves in need of
capital. For many, an influx of funds can help their business development
plans, both in the short and long term. That might mean deploying capital
to organic growth in existing markets—adding staff and building new
facilities. It also might be funding more ambitious plans, like acquiring a
competitor or entering into new markets or product lines.
In the Deloitte 2018 Global family business Issues balked at getting a bank loan when the
survey of 400 family businesses, more than While those drivers are similar to the needs banks started asking for documents
four in 10 say they expected to acquire of private companies, there are some unique that the family had kept confidential and
another company in the year ahead; reasons why family companies may need considered personal.
about half say they would boost staff.1 cash. Some need capital to respond to family
dynamics such as cashing out relatives who The twin factors of maintaining control and
The stakes are high: A lack of capital are retiring or simply to provide money to preserving privacy might lead some families
could lead the company into irrelevance family members who may need it. to shy away from public markets and initial
or bankruptcy, putting an end to the public offerings. While the absence of stock
institution the family has created. There’s a commonly held belief that exchange pressures gives them greater
family-owned businesses are self-financing. freedom to operate, limited access to public
External developments are heightening Yet, less than one-third (30 percent) of markets when funds are needed can turn
the urgency for companies to raise family-held firms we surveyed expect to tap the positives of independence from the
capital. Changes in business dynamics are internal resources when then they need market into a problem if other sources of
occurring rapidly, meaning that companies capital, as opposed to 35 percent of private capital become more scarce.
are recognizing and feeling the need concerns.2 Many look outside, to private
to move fast to acquire technology or investors, public markets, and banks. While Another factor common among family
enter into new regions and service lines. these are traditional sources of capital, businesses is a focus on long-term capital
Business uncertainty is a factor—from issues emerge with each that are distinct to appreciation. Sheltered from the demands
Brexit to trade issues to regulation and many family-controlled enterprises because of appeasing public shareholders on a
government instability—in the low interest- of some unique factors that define many of quarterly or semi-annual basis, many
rate environment. These outside trends these businesses and shape the decisions businesses focus on creating generational
have many family businesses focused on they make in securing capital. One factor is wealth and so have a longer time frame
securing capital now to make sure the the tendency to prioritize maintaining family than other companies. That may shut out
business has the funds to address changing control, or at least influence. Another is the IPOs as a source of capital.
dynamics, not only within their own families importance given to discretion and privacy.
but also on a macro level. One Japanese family business, for example,
27
In some parts of the world, particularly in Traditionally, bank finance was the
Asia, there’s one additional complication capital-raising route favoured by most
in raising capital. Many family-owned family businesses if they couldn’t generate
businesses have existed for decades the cash internally. While still a popular
(in Japan, some are centuries old) and option, more family businesses are
have complex business structures. That turning to outside investors (including
can make them difficult to value. As a private equity, alternative-debt investors,
result, there have been instances in Asia large family offices, and high-net-worth
in which companies try to liquidate their individuals), especially when these investors
shares and raise capital but run into can offer additional expertise within a
valuation problems and difficulties with particular industry.
tax authorities or regulators.
A growing number of non-traditional
Families that Opportunities

Families that plan ahead can mitigate
sources of capital, however, are willing to
provide capital on favourable terms with
plan ahead can

many of the issues that might hinder investment criteria that are better aligned
their ability to raise capital. For example, with the needs of family businesses. Though
through carefully designed shareholder family businesses are keen to maintain
mitigate many agreements that could last for decades and control, they also recognize that outside
regulate how shares can be traded inside experience and knowledge can bring
of the issues and outside the family, families can ease
ownership concerns and open up
significant benefits to their company.
that might capital-raising opportunities. Overall, a rising pool of capital from a variety
of providers is coinciding with heightened
hinder their While only a minority of family businesses

express interest these days in an IPO, they
needs for families to secure cash to fund
their future growth, particularly amid
ability to raise might want to reconsider. In Asia, families

often turn to the public markets to help solve
uncertainty about the near-term outlook.
Family businesses want capital today
capital.
the complex valuation issues they encounter because the marketplace could be very
when they try to assign value to their large, different in the near future. In the event of
sprawling family business. For companies an economic downturn, for example, access
with such aspirations, that might mean to capital might not be as strong as it is
they need to reorient their strategic focus— today, with many providers and historically
and align their finance and other good borrowing terms. This can be a great
reporting functions—toward quarterly time to begin to assess what a family
performance measures. business will need for the road ahead.
28
Questions to consider:
• What capital needs will my family business
face in the near and long term?
• What are my options for securing capital?
What non-traditional sources have
we considered?
• What trade-offs (if any) is my family
business willing to make to secure capital?
• Is it important to find a lender who can
bring more to the table than capital, in
terms of advice and guidance about
my business?
• Do we have enough financial flexibility and
access to capital to weather a significant
economic downturn?
£ € W
Notes
1 Global perspectives for family businesses: Plans,
priorities, and expectations, Deloitte, March 2018,
https://www2.deloitte.com/global/en/pages/
strategy/articles/global-perspectives-for-family-
businesses.html.
2 Global perspectives for family businesses, Deloitte,
March 2018.
€
W€ 29
Social responsibility:
Why family businesses give back
Peter Pagonis
Deloitte Private Asia Pacific leader for family enterprise consulting
30
At a certain point in the life cycle of family businesses, many owners
ask themselves how they can support their communities—the places
where they have historical, economic, and social ties. While some family-
run businesses traditionally contribute directly to charity, others set up
foundations that support the values of the company.
Times and traditions are now changing. Issues Approaches to social impact among family
Increasingly, family-owned businesses Social-impact investing includes a number companies and family offices vary greatly
and family offices are giving back through of different models, from upfront payments across regions, largely due to historical
social-impact investing—identifying to debt-based funding where providers split business trends. For instance, some US and
causes that include social objectives and the risk with borrowers, to investments European family-owned companies have
financial returns, with specific performance where payments come when specific been operating for decades or centuries
measurements of both areas.1 Such outcomes are achieved.4 Traditional social and therefore have a long history of social
investing is a relatively new phenomenon: responsibility activities, on the other hand, responsibility activities.5 In Australia,
according to the non-profit Global Impact sponsored by many family-run businesses meanwhile, the legacy of postwar European
Investing Network, more than half of all and family offices, involve founders immigration policies means that family-
such investments have been made in the and owners setting up a foundation to owned companies and family offices are
past decade. The current global impact support a number of charities. Successive generally newer and have begun to develop
investing market stands at $502 billion.2 generations are challenging that model in their social-impact policies more recently.6
favour of ways to embed social impact
In Deloitte’s Global family business survey into projects. As family-run businesses across the globe
2019, 19 percent of respondents report that shift their giving priorities to social-impact
making a social impact with the business is There are scenarios in which emerging investments, benefactors’ choices are
among their family’s priorities over the next generations within family businesses coming under closer scrutiny. For instance,
10 to 20 years.3 They have multiple paths attempt to influence founders about new some family members might not support
to consider when they’re ready to invest approaches to social responsibility. The investments with connections to potentially
their wealth to ensure their contributions children haven’t got the power, but they controversial causes, products, or services
produce lasting impact. want to support social impact. So how do that run counter to the mission of the
they convince the previous generation, company. There’s lot more pressure now
which still controls the money, to decide to to ask, “Are we doing the right thing? Are
invest in these areas? we supporting the right companies? Are we
investing in the right companies?”
31
Opportunities Questions to consider:

One of the first things family-business • What is my family’s commitment to
leaders should consider when they’re social responsibility?
setting up a social-impact program is • Am I open to new approaches
establishing guidelines about transparency. to philanthropy?
Some of the details businesses might • How do I determine whether my
consider when investing in social-impact company and family are investing in
projects include the development the right causes?
of contracts, project design, and the • Have I set up a mechanism to ensure
evaluation of program outcomes. accountability from the organizations I
Companies should also have a clear idea intend to support?
of the social responsibility policies of the • How can I attribute financial value to
organizations they intend to support and, social impact?
Companies before they start to invest, ask for

evidence of the organizations’ activities
• How should I continually evaluate
my investments?
should have
in those areas. • What mechanism have I put in
place to decide how to end an
In families that aren’t considering such investment/engagement?
a clear idea projects at all, it’s common to hear younger
generations question why founders
of the social aren’t supporting social-impact projects.
One way to introduce the concept is by
responsibility including younger or newer family members

in decision-making roles concerning
policies of the investments in corporate giving.
organizations In this year’s global family business survey,

two-thirds of respondents say they expect
they intend to
to hand down their company within
the family.7 One of the key ways these
companies can help their social-impact
support. program endure is getting family members
across generations aligned on investment
goals to avoid conflicts.
32
Notes
1 Natasha Doherty and Simone Cheung, “The
role of evaluators in social impact investing,”
Australasian Evaluation Society Conference
presentation, Sept. 20, 2016, https://aes.asn.
au/images/stories/files/conferences/2016/
Presentations/27NatashaDoherty.pdf.
2 Abhilash Mudaliar and Hannah Dithrich, “Sizing
the Impact Investing Market,” Global Impact
Investing Network, April 1, 2019, https://thegiin.
org/research/publication/impinv-market-size.
3 Deloitte Global family business survey 2019, Deloitte,
June 2019, https://www2.deloitte.com/content/
dam/insights/us/articles/r7-12011_long-term-
goals-meet-short-term-drive-family-business-
survey2019/DI_Long-term-goals-meet-short-
term-drive.pdf.
4 Doherty and Cheung, “The role of evaluators in
social impact investing.”
5 “World Pasta Day 3 million spaghettate to
charity,” italiaatavola.net, Oct. 18, 2017, https://
www.barillagroup.com/en/media-coverage/
italiaatavolanet-world-pasta-day-3-million-
spaghettate-charity.
6 “Postwar immigration drive,” National Museum
Australia, 2019, https://www.nma.gov.au/defining-
moments/resources/postwar-immigration-drive.
7 Deloitte Global Family Business Survey 2019.
33
Family businesses
and the future of work
Andrea Circi
Global tax and legal family business leader, Deloitte Private Italy
Michelle Hartman
Family enterprise consulting partner, Deloitte Australia
34
Every family business is unique and has its own distinguishing culture.
But every family business faces the same core challenges, including
attracting, developing, and retaining talented workers and adapting to
changing workplace environments. In Deloitte’s 2019 family business
survey, talent/human resources emerged as one of the top five priorities
for boards of directors over the coming 12 months.1
As their companies grow and the workforce When outside leaders are brought in, their firm ideas about how hard employees
evolves, many family businesses may need role needs to be clearly defined, as a lack of should work in the early part of their
to eschew the hierarchical, entrepreneur- clarity around their responsibilities can and careers and can bridle at the notion that
driven structures that created their often does lead to conflict. There is already staff deserve a more equitable work/
foundational success. Both family and the potential for tension since a third- life balance, among other things. First-
non-family employees require investment in party director who challenges a colleague generation leaders may need to adjust to
them, and younger generations in particular who is also a member of the family may changes in the workplace that younger
will likely reward these efforts by bringing simultaneously be challenging a member talent want. They want flexibility and
new perspectives to strategy setting. of the board of directors or a shareholder. parental leave and social impact. According
When the family foments a culture of to the 2018 Deloitte Millennial Survey, there
Issues interference, it can drive outside talent away were “strong correlations between those
The typical founder of a family business from the company. Even a veteran CEO with who plan to stay in their current jobs and
is a self-made matriarch or patriarch years of multinational leadership experience those who said their companies deliver
with entrepreneurial dreams and a bold may face new pressures in a family-led best on financial performance, community
business vision. But realizing those dreams environment. In these instances, companies impact, talent development, and diversity
takes a team, which often means hiring need a governance structure put in place to and inclusion.”2 It’s of little surprise that
a manager from outside the family, a stop the family from interfering with what the changing demographics of the labour
step that can be met with reluctance by they hire outside leaders to do. force is cited by nearly a quarter of the
founders. The first generation may not respondents in the 2019 family business
always understand that the presence of an More broadly speaking, it can also be survey, when they were asked to list
external manager and the development of difficult for founders to accept the different the issues likely to have the most
modern management culture create value demands of workers from younger significant impact on the market in
for the company. generations. For instance, they often have which they operate.3
35
Opportunities Even when employee development is a

When family businesses recruit external priority, though, tension between family
talent, it’s important to take into and non-family members is inevitable.
consideration cultural compatibility. Family Families can work to reduce this tension by
businesses tend to have strong values putting into place firm rules and regulations
and cultures that reflect the family and that anticipate conflict and help them
the company, and it is important to hire manage internal politics as well as the
people who understand the purpose business. Family governance structures
and character of the business and will fit can prevent interference by making family
in. But many family businesses may also members aware of exactly how and to
need to reinvent themselves by building a what extent they can be involved in the
culture that supports continuous learning, operation of the business. Role clarification
incentives that motivate people to take is really important. There should be role
As younger advantage of learning opportunities, and

a focus on helping individuals identify and
definition, key performance indicators, and
annual performance reviews so that if there
people
develop needed skills.4 Investing in talent is any conflict between family and those
development programs can help strengthen working in the business, the solutions
employees’ attachment to the company are clear.
join the while expanding their capabilities.
As younger people join the organization and
organization, These kinds of investments tend to happen
more often after the founders have made
begin working their way up, their presence
often leads to the introduction of new
it often way for new leaders. Once the second or

third generation takes the helm, they often
technologies, innovation, and sources of
growth.5 In one company, for example, a
leads to the start to consider programs for education

and retaining external managers. The
second-generation leader recognized his
son’s technological savvy and awareness of
introduction second generation of the family is often very

well educated and more oriented toward
how the industry was changing. Although
he didn’t originally understand it, the older
of new
management than entrepreneurship. leader allowed his son to add an online
market to their business and test it for three
months. The son put everything behind the
technologies, digital platform to set it up for success during
the trial period—and it became an integral
innovation part of their business that now accounts for
60 percent of company revenue.
and sources
of growth.
36
As family businesses become more digital, Questions to consider: Notes
they face a growing imperative to redesign • How much of a priority is your board of 1 Long-term goals, meet short-term drive: Global
themselves to move faster and adapt more directors placing on talent and human family business survey 2019, Deloitte, June 2019,
https://www2.deloitte.com/us/en/insights/
quickly. For some, human resource issues resources issues? topics/strategy/next-generation-family-owned-
may require organizational restructuring. • Does your family business have a businesses-emea.html.
This can be a particularly difficult task for strategy in place for meeting future 2 2018 Deloitte Millennial Survey, Deloitte, March
family businesses to undertake, but the workforce requirements? 2018, https://www2.deloitte.com/us/en/
insights/topics/talent/deloitte-millennial-survey-
way high-performing organizations operate • When was the last time you revisited your
2018.html.
today is radically different from how they incentive program to reflect the changing
3 Global family business survey 2019, Deloitte.
operated just 10 years ago. One important demands of new workers?
4 2019 Deloitte Global Human Capital Trends, Deloitte,
part of designing for adaptability is to shift • Does your firm have protocols and
March 2019, https://www2.deloitte.com/content/
away from hierarchical organizational structures in place stipulating the roles dam/Deloitte/cz/Documents/human-capital/cz-
structures toward models where work is and responsibilities of family members hc-trends-reinvent-with-human-focus.pdf.
accomplished by teams; the smaller and and non-family professionals? 5 2017 Human Capital Trends, Deloitte, February
more flexible the better, in many cases. • Has your company invested in suitable 2017, https://trendsapp.deloitte.com/
reports/2017/global-human-capital-trends/the-
educational and development paths to organization-of-the-future.html.
nurture the talent of next-generation
family and non-family talent?
37
Ecosystems and innovation
Walid Chiniara
Deloitte Middle East leader for family enterprise consulting leader
38
A lot of the talk about access to assets versus outright ownership in today’s
marketplace is around trends like car-sharing or co-working. Companies
that operate under these collaborative models have dramatically disrupted
their industries. Family-owned companies are also debating the value of
owning assets versus sharing them with partners in their ecosystems.
In a recent global Deloitte survey of Issues A related issue for family-run businesses
next-generation family leaders, 56 percent One way to view ecosystems is by that are considering alliances is whether to
of respondents see opportunity to tap into describing them as communities that build, buy, or own particular assets in the
business ecosystems to grow their firms. create and capture new value through first place. Cost, technical complexity, and
Many executives in the survey (65 percent) both collaboration and competition.2 As the availability of talent to build solutions
say they’ve increased their interactions family businesses explore these networks, internally are among the factors they
with third parties in recent years. Yet, only one of the first hurdles they encounter is encounter in these scenarios.
a quarter of respondents report having a often their own reluctance to trust third
digital transformation strategy in place.1 parties with sensitive company matters. Instinctively, people will start by saying,
Consequently, it may take years and a “We’ll build this on our own.” Once they
Joining and thriving in an ecosystem can great deal of convincing before some start digging into it, doing the research
be a challenging yet rewarding endeavour family businesses are willing to even and the analysis, they often realize there
for family businesses. Turning to external consider potential alliances. Add in the are components they cannot master
partners to collectively launch a new complexities of potential partners that themselves, and that they are better off
product or service can create conflict— are located in a different region or on a working with a specialist so they can achieve
especially when business interests have different continent, and it can be even more their targets faster and more efficiently.
been closely guarded within family circles. difficult to persuade business owners that
On the other hand, the opportunity to collaboration with external partners is a There’s also an emotional element to
grow a business as part of an ecosystem good idea. alliances. Before signing an agreement, the
of disruptive innovators can take a parties tend to consider the underlying
family business as far as its members’ Many family business leaders work by principles of the legal framework— to
imagination will allow. instinct, and their appetite for risk is usually ensure the agreement is built upon mutual
low. They are concerned about privacy respect, and that partnerships are bound to
and about the environment in which their transparency in both deed and word. That’s
partners live. They take their time, and especially true in global scenarios, where a
they wait for what they perceive to be the business partner is out of immediate reach.
right opportunity.
39
Business partners have to accept the fact The existence of borderless supply chains is
that they may no longer own 100 percent of one way family businesses can achieve scale
the parameters of their chain of production. without having to make major operational
They also need to identify how they are adjustments. Reaching an agreement
going to get their product at the best price with a foreign supplier is far less complex
possible, and with the best relationship than it used to be. It’s easy for a family
possible. The world today is built on business to identify a potential partner in
relationships: “Get it right. You won’t have a India or Zimbabwe, source raw materials,
second chance to do business with me.” intelligence, and know-how—all without
having to leave their home location.
Opportunities
There’s power in collaboration when it Another phenomenon that may encourage
comes to family-owned firms—which also global alliances is the generational shift
Research happen to be among the most innovative

companies in their sectors. A meta-analysis
that’s taking place in family companies,
especially in developing markets. As noted
reveals that
of 108 studies over three decades shows in the 2019 UBS Campden Wealth Global
that although family firms tend to have Family Office Report, past generations
smaller research and development budgets, favoured ownership, the current generation
organizations their output per dollar invested in research values experiences, while the next
is higher than other companies of similar generation will regard transformation as a
experience size. The research revealed that these
organizations experience success when
core value.4 The next generation has less
apprehension about the unknown, making
success when they access trusted external networks to

help them develop new business ideas.3
alliances, and partnering with people
they don’t know on the other side of the
they access continent or the world.
trusted To thrive in today’s dynamic, complex

business ecosystems, many family-owned
external
businesses will need to shift their mindset
to take a more expansive view of the kinds
of business relationships they can use to
networks to drive value. Family businesses that set
high standards around accountability and
help them measurement may have a better chance of
success through strategic alliances.
develop new
business
ideas.
40
• What can you accomplish by joining an 1 Next Generation Family Businesses: Exploring
alliance that you wouldn’t be able to business ecosystems, Deloitte, May 2018, https://
www2.deloitte.com/lu/en/pages/strategy/articles/
achieve on your own? next-generation-family-business-exploring-
• How much are you willing to share with business-ecosystems.html#.
your innovation partners? 2 Eamonn Kelly, “Introduction: Business ecosystems
• Have you clearly defined the questions come of age,” Business Trends 2015, Deloitte,
April 2015, https://www2.deloitte.com/us/en/
to be addressed during the due
insights/focus/business-trends/2015/business-
diligence phase? ecosystems-come-of-age-business-trends.html
• How would you assess existing 3 Nadine Kammerlander and Marc van Essen,
ecosystems within your industry? Are “Research: Family Firms Are More Innovative
there successful examples of alliances Than Other Companies,” Harvard Business
Review, January 15, 2017, https://hbr.org/2017/01/
you can point to? research-family-firms-are-more-innovative-than-
• What are your non-negotiable values in other-companies.
an alliance? 4 Global Family Office Report 2019, UBS and
Campden Wealth Research, https://www.ubs.
com/global/en/wealth-management/uhnw/
global-family-office-report/global-family-office-
report-2019.html.
41
Cyber risk for family businesses
Ayşe Sencoğlu
Family business leader, Deloitte Turkey
Ignacio Lezáun
Global Deloitte Private risk advisory leader
42
Today’s family businesses operate in a highly connected environment in
which the increasing volume of data has also intensified the risk of online
attacks. Though many family businesses may consider themselves out of
harm’s way because they operate out of the spotlight, they still may be
large enough to make attractive targets for hackers and criminals.
Despite the warnings and constant media problem in areas such as the Middle East. businesses also should be concerned about
coverage of information security threats, In this region alone, organizations reported exposure to attacks that arise from the use
many family businesses have comparatively the highest average number of breached of connected devices, which could even
weak cyber defences. Consider a recent records per incident—40,000 compared expose homes and cars to cyber intrusion.3
report by Campden Research in which to the global average of around 25,500
32 percent of family offices reported per incident—according to a recent Everything around families is sensitive
losses from cyberattacks, yet fewer than annual study on the financial impact of information—their privacy, information
half (48 percent) had cybersecurity data breaches.2 about their assets and the non-business
plans in place.1 initiatives they have. As potential targets
Awareness of and potential responses to for cyber criminals, families have to work to
If family businesses intend to overcome these threats by family businesses generally protect their information, their privacy, and
cyber threats, everyone from the founders vary by the size, industry, and visibility of the their honour.
down to the most recently hired employees organization. For instance, a manufacturing
need to understand the risks—and firm might be focused on keeping its Complying with national and international
recognize that the bad actors can launch intellectual property secure throughout information security regulations is another
attacks that hit close to home. a supply chain. A consumer products issue family-owned companies have to
company might be more concerned about manage. In Turkey, for instance, the KVKK
Issues customer data. In terms of governance, Personal Data Protection Law went into
One of the most common tactics for cybersecurity is now an agenda topic for effect in 2016 in an attempt to bring the
cyber criminals is gaining the confidence many boards of directors. country’s data protection laws into harmony
of employees through realistic-looking with those of the European Union, and
communications. The offenders exploit Regardless of company size, sector, or applies to entities processing personal
that trust, convincing workers to release prominence, the potential damage to data in Turkey.4 The EU’s 2018 General Data
sensitive information, approve a financial family members’ reputation is a worrying Protection Regulation (GDPR)—which sets
transaction, or take other action that can consequence of information security guidelines for companies that collect and
have damaging consequences for the breaches. For example, fake social media process EU customer data—joins a small
company. So-called phishing attacks are posts from a hacked account can potentially but growing number of privacy-focused
a global phenomenon, and a frequent harm a company’s standing. Family laws family businesses will have to keep
in mind.5
43
Opportunities Questions to consider:

Some leading family businesses are • Do you know your company’s
addressing information security risks by cybersecurity maturity level?
embedding cyber readiness into their • Do you have a defined strategy to identify,
business strategy.6 In addition to third- protect, detect, and respond to potential
party monitoring tools that can detect cyber threats that may affect your
anomalies and enable a quick response, business and/or your family?
many families are taking advantage of • Understanding that many cybersecurity
education and awareness training, not just breaches are caused by human error, does
for employees but also for the founders and your company train employees to keep
their successors. Some companies conduct vulnerabilities low?
full-day training sessions, while others • How can you start or improve internal
simulate phishing attacks on their own training for staff on ways to avoid and
Some leading employees to help them recognize the signs

of a breaching attempt.
detect threats?
• Are your data storage policies sufficient
family
and up to date? How do you know?
In addition to taking preventive, detective, • Do you have a clear idea of the digital
and response measures, some companies assets that are most critical to your family
businesses and business families are also acquiring and your wealth?
cyber insurance against breaches to protect • Do you have a single point of contact who
address the business. The global cyber insurance
market was estimated at about $4.5 billion
is responsible for information security
matters? If not, are you willing to assign
information in 2017, according to the most recent report

from the EU-US Insurance Dialogue Project.7
this responsibility to someone on
your team?
security risks In the event of a cyberattack, the extra

• What is your organization’s social
media policy?
by embedding emotional element within families can

present additional challenges. But for
• How effective is your organization’s
policy on the use of personal devices
cyber
families that are prepared, the response for work purposes?
can be quick and effective. • Are you and your family members aware
of your level of exposure to cyber, IT or
readiness into social media risks? What measures are you
taking to minimize exposure?
their business
strategy.
44
Notes
1 Cyber threats to family offices: How a resilient
approach in the family office can thwart today’s
cyber threats, Deloitte, 2019, https://www2.
deloitte.com/content/dam/Deloitte/uk/
Documents/private-markets/deloitte-uk-cyber-
threats-to-family-offices-web.pdf.
2 Press release, “IBM Study Shows Data Breach
Costs on the Rise; Financial Impact Felt for Years,”
July 23, 2019. https://newsroom.ibm.com/2019-
07-23-IBM-Study-Shows-Data-Breach-Costs-on-
the-Rise-Financial-Impact-Felt-for-Years.
3 Cyber threats to family offices, Deloitte.
4 KVKK, “Data protection in Turkey,” https://www.
kvkk.gov.tr/Icerik/5389/Data-Protection-in-Turkey
5 Deloitte GDPR Benchmarking Survey: The time is now,
Deloitte, 2018, https://www2.deloitte.com/lu/en/
pages/risk/articles/deloitte-gdpr-benchmarking-
survey-the-time-is-now.html
6 Blog posting, “Cyber risk – don’t be alarmed,
be prepared,” Deloitte Private UK, April 4,
2018, https://blogs.deloitte.co.uk/deloitte-
private/2018/04/cyber-risk-dont-be-alarmed-be-
prepared.html.
7 EU-U.S. Insurance Dialogue Project Report,
October 31, 2018, https://eiopa.europa.eu/
Publications/Other%20Documents/181031%20
EU-US%20Project%20Cyber%20Insurance%20
White%20Paper_publication.pdf.
45
Preserving family capital
Paula Higgleton
Vice chair and head of Family Office Services, Deloitte UK
Thrisha Soni
Tax director, Deloitte South Africa
46
Family-owned businesses have many demands on the wealth they create.
There’s the ever-present need to keep the business growing, but that
requires investment—often in areas that raise new risks—in order to stay
competitive. There are also the demands of family members who want to
increase their standard of living and enjoy their success.

Finally, many families want to create a A typical problem occurs when the wealth groups, younger generations from some
legacy outside the business, through creator is focused on preserving the wealthy families are seeking to leave the
philanthropic efforts that cement their wealth while the next generation is more country amid political uncertainty and a
name as multi-generational benefactors. interested in spending it. In their eyes, sluggish economy.3 One of the challenges
the family business is a piggy bank. But family businesses face is that future
Unfortunately, many families are not business leaders aren’t immune to calling generations might not be there to continue
particularly adept at managing these on capital for personal reasons. It is not the family legacy.
sometimes-competing aims. Research unusual for a family office to receive ad hoc
has found that only 30 percent of wealthy demands for funds from a founder or family These challenges are exacerbated by a
families see their wealth survive past the member to pay for properties or other lack of organization and structure in family
second generation, and that figure drops lifestyle assets on short notice. Very often offices representing families that have
to only 10 percent after the third funds are already committed or tied up in recently acquired wealth. For many such
generation.1 Wealthy families are illiquid investments, leading the family office families in emerging markets, this is new
recognizing that to sustain themselves to call upon other sources, such as the wealth, so it’s almost like starting from
through the third generation, they need to company’s operating businesses, to provide scratch. Without a dedicated third party
get a lot smarter about how they manage the cash. This inevitably leads to issues with to help manage their wealth, conflicts can
and preserve their wealth, and how they management, who typically would have break down into legal squabbles.
involve the next generation. earmarked surplus funds for investment in
the business. In developed markets, the problem is
Issues often the opposite: long-standing family
In Deloitte’s Global family business survey With newer family businesses in emerging offices that have failed to keep up with the
2019, more than a third (36 percent) of markets, these types of conflicts are often times. Many families have relied on the
respondents cite preserving family capital replaced by an urge to use newfound same team for decades to provide them
as one of their top long-term priorities for wealth as a means of securing a more wealth management advice and services,
their business, second only to continuing stable future—typically somewhere else. and some offices haven’t stayed abreast of
their legacy and tradition (49 percent).2 Political instability and wealth disparity in changes—in particular, exposure from new
Both objectives often face stiff competition developing markets can see wealth dry threats such as cyberattacks. Today, there
from individual family members with their up, virtually overnight. In South Africa, for is the prospect of real reputational harm for
own expectations for how wealth should example, where wealth redistribution in families who are the targets of cyberattacks.
be put to use. the post-apartheid era is producing new
millionaires from previously disadvantaged
47
Opportunities In many instances, appropriate diversification

Many family businesses are looking to of family wealth can ease concerns about
professionalize their wealth management, preserving it. In addition to alleviating the
either by creating a new family office need for individual family members to take
or ensuring they have the right people money out of the business to diversify their
staffing the office they already have, and assets themselves, this strategy can also
appropriate systems and controls in place. reduce dependence on the home market
For example, experts with advanced and its exposure to negative economic or
investing strategies such as private equity political developments.
can be aligned with tax advisers capable
of reviewing existing tax structures to In South Africa, for example, diversification
make sure they’re fully compliant with any is a huge part of wealth preservation. Many
jurisdiction in which the family invests or people are globalizing their exposure with
When things has a presence. the goal of preserving their wealth. As

those efforts expand, it will be critically
go wrong,
Education needs to take place about what important that they are done right, with
the family office is supposed to do and the due attention paid to compliance with tax
benefits the family members are supposed and other regulations across the globe,
family to receive. When things go wrong, family and appropriate governance to ensure risk
members may point fingers at the family controls remain up to date.
members office by default; however, some issues
may stem from a simple lack of alignment Emerging markets such as South Africa are
may point between the family and the family office

about vision and values.
also creating fresh opportunities for family
businesses to create legacies through a
fingers at the One recommendation is that family

greater sense of purpose. Many are working
to set up philanthropic foundations in order
family office offices staff sit down at agreed-upon

intervals with individual family members
to contribute to the region’s redistribution
of wealth. There’s a growing sense of social
by default.
to understand everyone’s needs. Often, responsibility among businesses to give back
these conversations can yield insights that to their communities. It’s now a big part of
help set the course for the family business, the mindset for wealthy families, both new
including decisions to sell the business and and established.
cash out or take some of the capital out
of the business and reinvest it in another
venture. This can help establish the right
expectations through transparency
and engagement.
48
• What kind of formal organization do we 1 Chris Taylor, “70% of Rich Families Lose Their
have in place for managing the wealth Wealth by the Second Generation,” Money,
Chris Taylor, June 17, 2015, http://money.com/
created by our family or family business? money/3925308/rich-families-lose-wealth/.
• If a family office has been established:
2 Global family business survey 2019, Deloitte,
— When was the last time our family June 2019, https://www2.deloitte.com/content/
members sat down with the family dam/insights/us/articles/r7-12011_long-term-
goals-meet-short-term-drive-family-business-
office to share our expectations
survey2019/DI_Long-term-goals-meet-short-
about its purpose and the use of term-drive.pdf.
family funds? 3 Chris Bateman, “Examining SA’s shifting wealth
— What kinds of capabilities do we need trends – Azar Jammine,” BizNews, August 16,
to add to our family office to meet our 2019, https://www.biznews.com/wealth-
building/2019/08/16/wealth-ranking-gdp-sa-
vision for it? azar-jammine.
• Do we have an appropriately defined
investment strategy?
• Are we confident that we are fully in
compliance with the tax and other
reporting requirements of every country in
which we reside, invest or own property?
• Could our family’s philanthropic mission
benefit from being more formalized?
49
Succession planning:
Regional perspectives
Cynthia Ying Chen
Director of family enterprise consulting, Deloitte China
Lutz Meyer
Family business leader, Deloitte Germany
50
Around the world, many families are not fully prepared to transfer their
business to the next generation. In last year’s family business survey by
Deloitte, just 41 percent of respondents say their business is ready for the
future in terms of succession planning. By contrast, more than half say
they are fit for the future when it comes to issues surrounding ownership,
governance, or strategy.1 As the survey results show, succession is the

challenge many families find most daunting.
Our findings on more specific planning Issues or possibly start new ventures rather than
details show the extent of the work to be In China, most of the wealth in family fully take the reins of the existing enterprise.
done: Just 26 percent of respondents said companies is quite new. The first opening Another common feature of family-business
they had a succession plan in place for the of the Chinese economy only began in succession planning in China relates to the
chief executive position, and even fewer had the late 1970s under Deng Xiaoping, and government’s one-child policy, in place
plans for other C-suite roles. It’s not for lack the extraordinary growth in the country’s until recently. As a result, many families in
of wanting. Almost two-thirds (65 percent) private sector has mostly occurred in the business have only one child.
said they wanted to pass ownership to the past two decades. This means that many
next generation, and within that group, Chinese family businesses are grappling Japan is in some ways China’s opposite,
30 percent said they wanted to keep both with succession for the first time. Readiness with a well-established tradition of family
ownership and management in the family.2 in China is 15 percent, compared to the companies passing from generation to
global average of 42 percent among generation. Some of the oldest family
Business succession, understandably, respondents in our 2019 family companies in the world are Japanese.4
is influenced by culture. The process for business survey.3 Adherence to primogeniture—the tradition
passing on a family business in China, for that the entire family business or fortune
example, can be very different from the What’s more, the second generation in passes to the firstborn son—helps keep
process in Germany. Even if the broad many wealthy mainland China families has control concentrated through multiple
preference for maintaining family control is mostly been educated overseas and may generations. This cultural feature has
seen everywhere, much of what goes into even have begun careers outside China. affected the succession of family
planning depends on the cultural traditions These younger individuals may want to go businesses in Japan for a very long time.
and attitudes in a particular society. into a different business than their parents,
51
Germany is another place where Wherever the family is located, that first
multi-generational family businesses are handoff—from the founders to their heirs
well established, and most of these are —should include clear instructions for how
doing a good job planning for succession. the enterprise will be run and governed
While some first-generation entrepreneurs for the generations that follow. Especially
in Germany may not have adequate in countries such as the United States
plans established yet, businesses that where primogeniture is not the norm, each
have already passed at least to a second member of successive generations may get
generation are likely to have a family a share of family assets. Once the family
charter in place and to have worked tree expands through five or six or seven
through key issues. generations, issues become much more
complex to deal with.
Opportunities
Once the In China, members of the second

generation of a family business may be
Well-documented instructions also are
important when more than one child will
family tree is
better positioned than the first to get the be inheriting. There’s potential for conflict
succession-planning effort moving—and should it be left unclear who will have
may be incented to do so based on their responsibility for particular aspects of the
expanding own unique needs. Their parents have business when succession occurs. Related
spent decades immersed in the operational to that, family businesses also should
or enlarging and strategic matters that go into building a
business, and they may have a difficult time
strive to be certain that individuals in the
next generation are properly prepared for
through shifting focus to the task of handing the

company off to heirs.
the handover, with a full understanding of
the business, the right set of skills, and an
five or six Because there’s often just one child in the

established timeline.
or seven next generation, families in China should

be paying attention early to the question
In Germany, it’s sometimes possible to
lose sight of key issues that could help
generations,
of whether that child wants to take over ensure the long-term operational success
running the business. If not, the family will of a family company because complicated
need to consider members of the extended inheritance tax issues become dominant
issues family—cousins perhaps—who might in succession planning. While efficient
be groomed for the task. Alternately, the tax management is necessary, too often
become first generation may want to think about
developing managers and executives who
taxation issues come first and the tax
adviser may dominate the process. Family
much more can be trusted with the future leadership of

the organization.
business may want to reverse the order,
focusing first on preparing the successors
complex to who will run the company and positioning

the business to thrive—and then consider
deal with. the tax aspects.
52
Indeed, keeping a focus on business Questions to consider: Notes
strategy throughout the succession- • Will control of our company remain 1 Global family business survey 2019, Deloitte,
planning process is becoming more concentrated in a single individual in June 2019, https://www2.deloitte.com/content/
dam/insights/us/articles/r7-12011_long-term-
important than ever. As industries the next generation, and is that person goals-meet-short-term-drive-family-business-
are disrupted by radical technological fully aligned with existing plans for survey2019/DI_Long-term-goals-meet-short-
changes—ranging from robotic process the business? term-drive.pdf.
automation to artificial intelligence— • Is there a process underway to identify 2 Ibid.

business models need to be rethought ever members of the extended family or 3 Ibid.
more frequently. professional managers who can be 4 “The world’s oldest family companies,” Family
groomed to lead the enterprise? Business: The Guide for Family Companies, http://
www.griequity.com/resources/industryandissues/
A succession plan cannot be set and then • Even if current leadership expects to run
familybusiness/oldestinworld.html.
put on the shelf. It should be a priority the company for many more years, would
to make regular updates as a family existing succession plans be sufficient
company’s focus and strategy change. for a smooth transition if something
Globalization makes this an issue that unexpected happened?
crosses all borders and affects succession • Does our company’s succession plan
planning in any culture. address a proper balance among family
members, shareholders, professional
executives, and other stakeholders?
• Are tax considerations taking precedence
in succession planning over operational
and strategic matters that might better
prepare our company for the transition?
• Is our family’s succession-planning process
dynamic enough to keep up with changes
in business strategy in response to
faster paced economic, market, and
technology trends?
53
Contacts
Carl Allegretti Report design

Global Deloitte Private leader Isaac Brynjegard-Bialik
Partner Senior manager
Deloitte LLP Deloitte LLP
callegretti@deloitte.com isaacb2@deloitte.com
+1 312 486 9809
Family Enterprise Consulting
William Chou Michelle Osry
Global Deloitte Private family Canadian practice leader, family
business leader enterprise consulting
Partner Deloitte Canada
Deloitte China mosry@deloitte.ca
wilchou@deloitte.co.cn
+86 10 85207102 Brian Brophy
Partner, Tax
Mathew Harris Deloitte Canada
Managing Partner bbrophy@deloitte.ca
Deloitte Private
Deloitte Canada
mathharris@deloitte.ca
+1 902 721 5696
Executive editor
Bob Rosone
Managing director
Deloitte LLP
rrosone@deloitte.com
Project lead
Harm Drent
Senior manager
Deloitte Netherlands
HDrent@deloitte.nl
Research and editorial lead

Janet Hastie
Senior marketing manager
Deloitte Services LP
jhastie@deloitte.com
54
Deloitte Private. We’re in the business of connection.
At Deloitte Private, we create long-lasting relationships with private businesses, entrepreneurs, family businesses and high-net-
worth individuals to help them take their vision to new heights with our global network of ideas, experience, and innovation. For
more information, visit deloitteprivate.ca
Acknowledgments
We would like to thank all of our Deloitte subject matter specialists for their time and the insights they shared for this report.
55
Deloitte Private leaders

Americas EMEA Commonwealth of Luxembourg
Independent States (CIS) Luc Brucher
Brazil Central Europe leader Svetlana Borisova Partner
Ronaldo Fragoso Friedrich Wiesmuellner Partner Deloitte Luxembourg
Partner Partner Deloitte Russia lbrucher@deloitte.lu
Deloitte Brazil Deloitte Austria sborisova@deloitte.ru
rfragoso@deloitte.com fwiesmuellner@deloitte.at Mickael Coq
Denmark Partner
Canada North South Europe leader Joern Jepsen Deloitte Luxembourg
Mathew Harris Kirsty Newman Partner mcoq@deloitte.lu
Partner Partner Deloitte Denmark
Deloitte Canada Deloitte United Kingdom jjepsen@deloitte.dk Middle East
mathharris@deloitte.ca knewman@deloitte.co.uk Herve Ballantyne
France Senior executive director
Caribbean and Bermuda Africa Emmanuel Gadret Deloitte United Arab Emirates
Stephen Kuzyk Mabel Kasente Ndawula Partner hballantyne@deloitte.com
Partner Director Deloitte France
Deloitte Bermuda Deloitte South Africa EGadret@deloitte.fr Netherlands
stephen.kuzyk@deloitte.com mndawula@deloitte.co.ug Ton van Abeelen
Germany Partner
Chile Austria Lutz Meyer Deloitte Netherlands
Pablo Herrera Friedrich Wiesmuellner Partner TvanAbeelen@deloitte.nl
Partner Partner Deloitte Germany
Deloitte Chile Deloitte Austria lmeyer@deloitte.de Nordic
paherrera@deloitte.com fwiesmuellner@deloitte.at Richard Peters
Ireland Partner
Mexico Belgium Anya Cummins Deloitte Sweden
Carlos Moya Nikolaas Tahon Partner ripeters@deloitte.se
Director Partner Deloitte Ireland
Deloitte Mexico Deloitte Belgium ancummins@deloitte.ie Poland
camoya@deloittemx.com ntahon@deloitte.com Adam Chroscielewski
Israel Partner
United States Central Europe Moshe Schwartz Deloitte Poland
Jason Downing Gabor Koka Partner achroscielewski@deloittece.com
Partner Partner Deloitte Israel
Deloitte LLP Deloitte Hungary mschwartz@deloitte.co.il Seweryn Dabrowski
jdowning@deloitte.com gkoka@deloitteCE.com Partner
Italy Deloitte Poland
Czech Republic Ernesto Lanzillo sdabrowski@deloitteCE.com
Miroslav Svoboda Partner
Partner Deloitte Italy Portugal
Deloitte Czech Republic elanzillo@deloitte.it Luis Belo
msvoboda@deloitteCE.com Partner
Deloitte Portugal
Petr Michalik lbelo@deloitte.pt
Partner
Deloitte Czech Republic
pmichalik@deloittece.com
56
Romania Asia Pacific New Zealand
Dinu Bumbăcea Bill Hale
Partner Asia-Pacific leader Partner
Deloitte Romania Mike Horne Deloitte New Zealand
dbumbacea@deloittece.com Partner bihale@deloitte.co.nz
Deloitte New Zealand
Spain mhorne@deloitte.co.nz South East Asia
Marcelino Alonso Dobao Richard Loi
Partner Australia Partner
Deloitte Spain Andrew Culley Deloitte Singapore
malonsodobao@s2g-bpm.es Partner rloi@deloitte.com
Deloitte Australia
Switzerland aculley@deloitte.com.au Taiwan
Karine Szegedi Cheli Liaw
Partner China Partner
Deloitte Switzerland William Chou Deloitte Taiwan
kszegedi@deloitte.ch Partner cheliliaw@deloitte.com.tw
Deloitte China
Turkey wilchou@deloitte.co.cn
Ali Cicekli
Partner India
Deloitte Turkey Kunisi Sekar
acicekli@deloitte.com Partner
Deloitte India
United Kingdom krsekar@deloitte.com
Emma Cox
Partner Japan
Deloitte United Kingdom Atsushi Numata
ejcox@deloitte.co.uk Partner
Deloitte Japan
atsushi.numata@tohmatsu.co.jp
Korea
Sung Hoon Oh
Partner
Deloitte Korea
sunoh@deloitte.com
57
www.deloitte.ca
Deloitte provides audit & assurance, consulting, financial advisory, risk advisory,
tax and related services to public and private clients spanning multiple industries.
Deloitte serves four out of five Fortune Global 500® companies through a globally
connected network of member firms in more than 150 countries and territories
bringing world-class capabilities, insights and service to address clients’ most complex
business challenges. To learn more about how Deloitte’s approximately 264,000
professionals—14,000 of whom are part of the Canadian firm—make an impact that
matters, please connect with us on LinkedIn, Twitter or Facebook.
Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of
Deloitte Touche Tohmatsu Limited. Deloitte refers to one or more of Deloitte Touche
Tohmatsu Limited, a UK private company limited by guarantee, and its network of
member firms, each of which is a legally separate and independent entity. Please see
www.deloitte.com/about for a detailed description of the legal structure of Deloitte
Touche Tohmatsu and its member firms.
Copyright © 2019 Deloitte Development LLC. All rights reserved.

Member of Deloitte Touche Tohmatsu Limited. 19-6509H

Private Company Issues and Opportunities 2020 - Family Business Edition

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Private Company Issues and Opportunities 2020 - Family Business Edition

Încărcat de

Drepturi de autor:

Formate disponibile

Family business edition

Family business and purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Carl Allegretti William Chou

Off the northwest coast of Japan, there is a family business that’s

and currently closing in on 50 generations of ownership.

Purpose Revolution. The wealth they have created

about the years. The father wants his son to succeed

purpose of feel like that’s an attractive opportunity for

the business; culture and Western culture. something as straightforward as superior

the family. of the family and defining how it fits in with

it’s one of the main reasons the company is

Assessing the health

family businesses that have stumbled or fallen apart due to conflict or

strife within the family. Multibillion-dollar enterprises have been split up

who remained keenly focused on the company’s success.

Opportunities Family businesses should consider

Much like a is suffering, and vice versa. For instance,

provides a way project likely outcomes for family businesses

to be more and business factors. As patterns start to

Examine the most successful technology companies in Silicon Valley, and

compared to their more traditional counterparts. As part of their regular

planning meetings, they constantly ask themselves what their market or

they need to be when that time arrives.

The zoom out/ Opportunities

but family The 10- to 20-year time frame is far long

businesses unchanged future, particularly given the

than most. Then the focus shifts back to the immediate

Good family governance:

Communication is probably the single most important ingredient in

building and managing a successful family enterprise, but it often proves

to be the most difficult part.

Opportunities Successful multigenerational family

We find it an integral part of their overall practice

governance structured approach allows difficult issues

as a process productive way, allowing a family to heal

of building Working through the mandate and

house, each fit

Once a family begins to communicate

Psychologists define attitude alignment as the concept of modifying one’s

opinion to agree with others. This is especially true in close relationships,

opinions to match those of their counterparts.1

If family-owned companies want to make Another opportunity for family-owned

It doesn’t specifically determining how wealth

old; being in There are some basic questions for family

business for we going to preserve family wealth for

decades is not strategy in terms of investment, in terms of

Like all businesses, family-held concerns often find themselves in need of

to organic growth in existing markets—adding staff and building new

facilities. It also might be funding more ambitious plans, like acquiring a

competitor or entering into new markets or product lines.

Families that Opportunities

plan ahead can

hinder their While only a minority of family businesses

ability to raise might want to reconsider. In Asia, families

At a certain point in the life cycle of family businesses, many owners

ask themselves how they can support their communities—the places

run businesses traditionally contribute directly to charity, others set up

foundations that support the values of the company.

Opportunities Questions to consider:

Companies before they start to invest, ask for

responsibility including younger or newer family members

policies of the investments in corporate giving.