Dr Johannes Bruski
AbdulAziz AlGasim
Structuring Family Businesses
A Step by Step Process
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Structuring the organization
Legal issues relate to each
step in the structuring
process.
Defining Policies
They must be dealt with in
context.
Developing
the Final Structure
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Due Diligence
and
Fact Finding
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Fact Finding: Goals
As part of the first step, fundamental business and other goals
should be identified and ranked as a guideline for further review
and (legal) structuring. These many include:
Ensure Long-Term
Business Success and
Resilience
Ensure Continued Family
Influence
Ensure Orderly Succession
Ensure Fulfilment of Social
Responsibilities
Provide for Fair Treatment
of Exiting Family Members
Ensure Equal Treatment of
All Family Members
Ensure Respect for Family
Values And Enterprise
Culture
Ensure a Proper Separation Minimise Costs and
between Family Members
Expenses of the Chosen
as Shareholders and as
Structure
Business Managers
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Fact Finding: Risks and Issues
An indicative list of typical risks and issues is given below (not
necessarily exhaustive):
Strategy
Governance
Owner
RISKS
Market
Financial
Operational
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Defining Policies: Identifying Typical Issues
It may be helpful in exploring the position the family and the owners wish to take in respect of the
following issues that are present in many family businesses and may require particular (legal)
solutions.
Core Families and the Larger Family Enterprise
Family Influence as an
Opportunity and a Threat
Enabling Growth and
Ensuring Entrepreneurial
Autonomy
Family Expectations of Equality
and the Need for Differentiation
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Short Term Individual Interests of Major
Stakeholders and Long-Term Success of the
Family Enterprise
Protecting the Family and Meeting
Competitive Demands
Enabling Change and Preserving
Family Traditions
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Defining Policies: Identifying Success Factors
It may be helpful to single out the factors that have been relevant for the success of the family
business in the past or that may be conducive to continued or even increased success in the future.
These may include (but not be limited to):
Strategy Consensus
Qualified External
and Family
Management
Leadership on Each
Level (Family,
Ownership,
Management)
SUCCESS FACTOR
Sound Investment
Policy
Robust Legal
Framework
Unity of Owners
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Defining Policies: Fundamental Decisions
Family and/or owners should agree on fundamental structural, strategy and
policy decisions. These may include, inter alia:
Family Ownership Structure
Corporate Governance
Controlling and Limiting Changes
in Ownership
Continuing Family Ownership and
Divestment or Admitting Outside Investors
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Putting it together: The Final Structure
Basic Agreement on
Fundamental Principles
Family Council and
Family Office
Governance Related
Options
Certain Policies
Terms and Conditions of
a Transfer of Shares (or
equivalent rights)
Sanctions in Case of a
Violations of Agreements
Liquidity Programs for
Owners
Risk Diversification and
Ring Fencing
Management of Passive
Assets and Family Office
Contingency Planning for
Identified Risks
Tax Planning
Estate Planning
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The Final Structure continued
Basic Corporate Set-up
Alternatives
Holding Structure
Pooling Company
Structure
Domestic Trust Structure
Family Foundation
Structure
Foreign Truest or Foreign
Family Foundation Structures
Pooling Agreement
Structure
Closed Investment Fund
Structure
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Questions?
These are presentation slides only. The information within these slides does not
constitute definitive advice and should not be used as the basis for giving definitive
advice without checking the primary sources.
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