The enterprising family office

http://www.ifb.org.uk/ London is becoming home for an increasing number of family offices. A family office generally refers to a private company that manages investments for a single wealthy family. The company's financial capital is the family's wealth, often accumulated over many generations.

At a recent gathering of the IFB Family Office Forum owners were privileged to hear from author and consultant Mark Daniell who wrote Strategy for the Wealthy Family and other acclaimed books. One of Daniell’s themes is why only one of the 30 wealthiest families in the first edition of the Forbes “Rich List”, the Rockefellers, is listed today whereas the other 29 families have dropped away.

At the heart of growing the family’s wealth, and not just preserving it in the family office, is the need to maintain the entrepreneurial zeal and appetite to innovate and grow in each generation. Keeping this flame burning begins by instilling behaviours into the next generation that will encourage them to take entrepreneurial risks and make their own mark. The best family offices foster core values in the family such as dignity, accomplishment and responsibility.

Whether family office investments are made up of operating, or financial assets, the key to longevity is the positive engagement of the next generation. If the family business has been sold there could, of course, be a loss of identity so agreeing common values among owners and a shared mission becomes critical in order to retain unity and a sense of purpose. Recent IFB Next Generation Forum speaker Ben Goldsmith, who now chairs his family office, also highlighted the importance of strong leadership as another vital ingredient.

On September 28th when the IFB hosts its annual Family Office Forum Roundtable families will share their own experiences on how enterprising businesses manage to keep the entrepreneurial flame burning and grow their wealth. The debate goes on….

Family values and shareholder value

http://www.ifb.org.uk/
There is an even greater sense of anticipation now for the speech of CBI director-general Richard Lambert at the Institute for Family Business National Conference, in June, following the publicity surrounding his recent speech at the Royal Society of Arts. In comments that made the lead story in the Financial Times he explained how the relentless pursuit of shareholder value has helped to undermine the reputation of business. Richard will be tackling this question head on at our conference and will explore how family firms can develop trust as a source of competitive advantage.

His thesis, put forward at the RSA, is that the irresistible drive to reduce costs at any price has fractured the relationship between companies and their employees and local communities. An open capital market for control generating pressure in the form of hostile takeovers has further fuelled the trend. Another driver is excessive levels of high octane debt piled onto balance sheets. Crowning it all in the public’s eye is the widening pay disparity between top earners and the shop floor which has created a gulf between the haves and the have-nots in society.

Are family businesses any different? Does long-term stewardship which characterises the approach of much of the family business sector make for more moderate outcomes where employees have greater satisfaction at work and communities are not left abandoned? The answer is that at their best family firms can achieve this, but it’s not automatically the case. Every firm faces the relentless pressure of globalisation; family-owned factories have been shut and production has been moved offshore. But family business owners often have strong values which they wear on their sleeves and these set the tone for corporate behaviour.

To be the employer of choice in a town, or region, the best family firms create high trust organisations where individuals come to work feeling valued. They invest above and beyond the strict minimum that shareholder value principles would dictate because they want to be best in the business. Profit maximisation is not their sole mantra. Owners balance the requirements of the company for reinvestment with their expectations for liquidity. While the sector does face many challenges family firms can be role models by valuing stewardship above shareholder value.