Family business: you can not increase to lose
Dmitry Motorin talks about the problem of effective business inheritance and gives advice to owners and founders of companies how to transfer their business to the heirs without problems
In the county of Lancashire, in England, about family companies they usually say that “there are only three generations between tattered shoes.” Our country has a hot issue of capital inheritance to go in the next 10-15 years. There are historical reasons for this.
It is amazing that not only people, but also the companies created by them, want to live forever. Many of today’s successful enterprises were created on the ruins of the USSR economy in the 90s and with new opportunities in the 2000s. These firms turn out to be the same living organisms, though social, and they just like their founders want to extend their active phase of life. The question is, how true shareholders are able to keep track not only of their longevity, but also the longevity of their company?
Unfortunately, there are no open statistics on owners of large assets and capital in Russia. Money loves silence. But according to experts in asset management, today in our country a little more than 1,000 families live, owning a substantial fortune, even by American standards, of more than $ 100 million. Large fortunes are mostly controlling stakes in large companies or assets.
By coincidence, the average age of the owners of such assets is 56-67 years. The age of wisdom, on the one hand. On the other hand, the age of putting things in order and preparing them (affairs) for transfer to either heirs or third parties in management, although in Russia this tradition has, so far, to be honest, has not yet happened.
The reason for this is the permanent stripping of capital in our country over the past 100 years, which, in my opinion, has become one of the factors that restrain business activity and the development of our economy for another 50 years. An unofficial survey of entrepreneurs in our country aged 35 to 45 showed that the reason for the lack of continuous business development is not only related to the qualifications of managers. Most business people are concerned about the visibility of their large assets for raiders of various stripes, including from government agencies. They are just scared to grow a business.
Judicial practice of the last 5 years confirms this. The requirements of the cornucopia in the form of state contracts make influential people in different circles to pay attention to local operating enterprises and companies. Buying at full cost of the enterprise often fails, as current owners do not dream of parting with a cash cow. Then one of the dozens of schemes to prosecute shareholders and buy back assets at discount prices is launched.
However, let us return to those families that have passed this line of high risk of taking the business away. The question of fathers and children, as we recall from the lessons of literature in Soviet schools, has always been dramatic. As the practice of today shows, the classics of the genre have not changed at all. The problem of inheritance in conditions of sweeping capital in the country, multiplied by the conflict of fathers and children, exists.
There are several reasons for this. One of them is a mixture of communication within the family. The founder cannot leave his role even in the circle of loved ones. Moreover, it is generally accepted that when talking in a businesslike manner in the family, the father, as it were, sets up children on the thorny path of business. As a result, against the background of hormonal changes and self-awareness of themselves as individuals, children often do not understand who is talking to them at the moment – father or CEO? Live under the control of the CEO every day, you see, a great test for the adult psyche, and not just the child.
The second reason for the problems of family-owned companies is the irremovability of power. In publicly traded companies, shareholders place high demands on top executives. Therefore, as a rule, in their place general directors rarely linger for more than 3-5 years. Changes in management, although painful, are more often useful for the companies themselves, since their capitalization is more transparent than in a family company, and therefore higher. In family-owned companies, the traditions that are founded by the first person do not always fit well into the modern world of change. 20 years at the helm of a company without clear feedback from the market, without an external assessment of the quality of management, do not always positively affect the value of the company. But the worst thing is not even that.
The third and, in my opinion, the most serious reason for the problems of transferring a family business is often simply in its … absence. What kind of nonsense? How can people with a fortune of $ 100 million not have a business? The author is crazy!
Alas, my inquisitive reader, I am in my right mind, just the Russian language is so rich in words that we use them without understanding their meaning. So the word “business” in our case will be more appropriate in some cases to be called a craft, that is, a commercial activity that is inseparable from its founder for various reasons, including the goals of the very first person.