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Sharing Family Business Knowledge Around the World  
November 2010
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"Family Sustainability" for High Net Worth Families
Fredda Herz Brown
In this video interviewFredda Herz Brown describes four characteristics which are essential for high net worth families who wish to create "family sustainability" over the course of many generations.  (Click here to see the video.  Run time 6:09).
Networks in Family Business 
Claire Seaman
How do family businesses get new ideas?  Face-to-face contacts within one's business, family and friendship networks is a key source of new ideas -- and an approach which can be expanded with online social networking.  (Read more from Claire Seaman and add comments.)
Should Families Stay Together? 
Edouard Thijssen
When there is a generational transition, it is reasonable to ask if it makes sense to continue to stay together as a family, or divide up the financial assets.  Staying together allows a family to leverage their intangible assets such as trust, knowledge, networks, and an ability to work together.
(Read more from Edouard Thijssen and add comments.)
Confronting the Various Forms of Greed in Family and Business 
Grant Goodvin
Most poeple like to think of themsevles as generous.  Yet greed can appear in subtle and disguised forms such as:  holding onto power, not sharing information, and entitlement.  Families-in-business can learn to teach generosity.  (Read more from Grant Goodvin and add comments.)

The misson of Family Business Wiki is "Sharing family business knowledge around the world."  Our past newsletters have supported this mission by featuring content from prominent family business professionals such as:  Joe Astrachan, Carmen Bianchi, Randel Carlock, Francois de Visscher, Grant Gordon, Jane Hilburt-Davis, Dennis Jaffe, Ivan Lansberg, Danny Miller and Isabelle Le Breton-Miller, Panikkos Poutziouris, Laurent Roux, Pramodita Sharma and John L. Ward. 

Upcoming issues will include content from:  David Bork, Leslie Dashew, Bonnie and Michael Hartley, Lee Hausner and James Olin Hutcheson.  Special issues will focus on "Women in Family Enterprise", "Family Business City of the Year", "Family Business Research", and "Family Wealth."  Selected issues will appear in both English and Spanish or English and French.

For this issue we are pleased to feature Philip Aminoff (President of European Family Businesses-GEEF, a federation of national family business associations from twelve European countries) for our Thought Leader Blog; Fredda Herz Brown in a video interview; a webinar hosted by Dennis Jaffe; and a review of a book just published by Randel Carlock and John L.Ward.

Family Business Wiki was recently recognized by the Wall Street Journal.  We hope that you also find value in this complimentary newsletter -- and that you will consider contributing your knowledge to Family Business Wiki -- in that way joining us in "sharing family business knowledge around the world."
Thought Leader Blog:  Philip Aminoff 

Time for a Level Playing Field


Philip Aminoff
Recently, family businesses from all over the world gathered for the FBN International Summit in Chicago.

At the moment, the mood in the family business sector is more positive than in living memory.  It is remarkable that the mood is so positive despite the world-wide systemic bias to the advantage of debt, short-termism and faceless ownership and to the disadvantage of equity, long-termism and direct ownership by human beings. One can only imagine how much more vibrant and sustainable an economy could be created if the financial and fiscal environment was conducive to long term entrepreneurship.

Fiscal systems across the world favor debt. The cost of debt is a deductible expense and interest income is taxed only at the recipient end.  In contrast, building equity in the form of paid-in capital and retained earnings is a bad idea from a fiscal burden point of view. If a company uses its own money to finance its factory, the absence of deductible interest and lease expenses will grow the company's taxable income. This income will be taxed at the prevailing corporate tax rate and any distribution of this income to the owners will be taxed again at the capital income rate.

Solving the problem in the financial markets by improving the attractiveness of equity rather than by pushing for indebtedness to continue to shoot to unprecedented levels would bring a
very important advantage: a world economy based on independent decisions on the use of equity in self-reliant companies in the real economy rather than on regulatory decisions on access to debt from government-supported financial institutions.  (Read more from Philip Aminoff and add comments.)
FBWiki Webinar 

Family Wealth and Family Offices


Dennis Jaffe
The September issue of the Family Business Wiki Newsletter was a special issue on Family Wealth and Family Offices edited by Dennis Jaffe.   

A complimentary webinar with six of the authors from that issue was held on September 28, 2010.  Topics addressed during this discussion included:
  • Becoming a trusted advisor to high net worth families
  • Addressing transformational versus transactional issues
  • Helping families to stay together
  • Connecting with the next generation.
Click here to see the Family Business Wiki webinar archive and to access a recording of this webinar.
Book Review 

When Family Businesses are Best:  The Parallel Planning Process for Family Harmony and Business Success by Randel S. Carlock and John L. Ward


John L. WardRandel CarlockWhat's your "elevator speech" when someone asks you "What does it take for a family business to be successful?"

It's not so easy to provide a meaningful response to this question - in the time it takes to ride an elevator!  When Family Businesses are Best:  The Parallel Planning Process for Family Harmony and Business Success, by Randel S. Carlock and John L. Ward, can help you to craft your elevator speech - and have a clear understanding of the keys to family business success.

There are many things to like about this book.  It includes concepts as well as practical tools and real-world examples; it is culturally sensitive to family businesses around the world; it addresses issues relevant to family enterprises beyond family businesses; and it is intended to be of value to family businesses as well as family business advisors and students.

But what is most impressive about the book is that it has taken a complex field and given it a simple organizational structure.  (Read more from Donald Levitt and add comments.)
Kathy Baker 

Keeping the Family Out of Court:  Alternative Dispute Resolution (ADR) and the Family Business


Kathy Baker

Family members come to court hoping the judge will be able to solve their disputes (and, of course, rule in their favor). But the judge actually has very little discretion in these cases. Often the only choice available under the statute is to rule for dissolution of the business. This is typically not the preferred result for the business owners. After consulting their tax advisors, they realize it is a very unappealing and prohibitively expensive option.

In our litigious society, the road less traveled seems to be one involving Alternative Dispute Resolution (ADR). ADR provides an avenue for the parties to talk about their dispute with a facilitator or mediator, and to resolve their differences before pursuing legal action. At the very least, the parties can be made aware of the expected costs of litigation and get a realistic view of the ability of a court to resolve their dispute.

A more proactive step would be to include language in the shareholder or partnership agreement to mandate that in the event of a dispute ADR will be pursued as a first option. This part of the shareholder agreement can act as a kind of "pre-nup" for owners - creating an opportunity for a conversation on how future disputes will be resolved while times are good and relationships are trusting and friendly.  
(Read more from Kathy Baker and add comments.)
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