Outsiders in The Family Business


Many families are faced with the dilemma of sustaining their legacy and wealth for generations to come. This fear is more pronounced if they feel that their children are ill-equipped for the rigours and responsibility that come with managing a family #business, which is partly a combination of human and intellectual capital.

A modern dimension in family business is the Family Office (no, not the physical space family members sit to run a shop), a private company that oversees the business of a family. It centralizes the management of the family’s business, assets and finances. Its focus could be property management, administration of family investments and trusts, and philanthropy. Sometimes the functions extend to management of household staff, arrangement of travel, direction of the family’s legal affairs, and accounting activities.

A single family office may be established to look after the assets of one family while a multi-family office exists typically to provide the service to more than one client.

The term ‘family office’ has become a label for the management of a client’s affairs. However, it may not always be an entirely accurate expression and may be subject to several interpretations. Indeed, some organisations that are described as family offices may actually not fit this description at all.

Benefits of establishing a Family Office:

  • It provides the family with comprehensive, personalized services and access to an array of integrated professional services, often not available elsewhere.
  • Family offices also give members the reassurance that their finances are well cared for, especially since these operations permit families to have substantial control over such matters. Accordingly, a family office operation can be an excellent means of exerting control over your finances while ensuring you receive a high standard of tailored care.
  • Family offices are highly personalized and flexible. The services offered cater specifically to the needs of the family, and may change and grow as the family’s needs evolve.

The concept of a family office can be traced back to the major-domo the old equivalent of the butler.  In the classical form, the company’s financial capital is the family’s own wealth, often accumulated over many family generations. Traditional family offices provide personal services such as managing household staff and making travel arrangements. Other services typically handled by the traditional family office include property management, day-to-day accounting and payroll activities, and management of legal affairs.

Family offices often provide family management services, which includes family governance, financial and investment education, philanthropy coordination, and succession planning.

The office itself is usually a limited liability company with management and support staff. The staff are remunerated usually from the profits or capital gains generated by the office. Often, family offices are built around core assets that are professionally managed. In addition, a more aggressive and well-capitalized office may be engaged in private equity placement, venture capital opportunities, and real estate development. Many family offices work with fund managers and are protected by strict investment guidelines.

The Trustee is statutorily authorized to perform this function and has the necessary expertise and professional skills to provide trust administration while acting as liaison with other professional advisers. The Trustee ensures asset protection and oversees succession plans and wealth devolution in addition to providing Company Secretarial services. In the Nigerian context we have a preponderance of privately owned companies.

A family could use a similar structure to operate a family business, acquire assets, and ensure succession planning and wealth devolution through generations. It is interesting to note that there appears to be growing awareness and movement in this direction.

How does this relate to the small business operator or entrepreneur. Directly? It does not. However, as the industry grows, so do the needs of the industry. Therefore, entrepreneurs with requisite skills can start to look to servicing Family Offices directly or through Trustees, who as mentioned above, are the main players in this growing business sector.

Travel agents, skilled artisans, facility managers, dress makers and designers, and other professionals such as lawyers, and even medical professionals will be called upon at different times to help fulfill a need or the other as requested by clients managing their affairs through trustees.

What is most important to the entrepreneur is that the opportunities are there, and service providers must be ready to take these opportunities.

There are fairly high standards required of vendors to Family Offices though, and it is best to quickly acquaint one’s self with these requirements to be prepared for said opportunities.

Now, which types of Nigerians do we suppose are best suited for the services of a Family Office?

More directly related #SME/entrepreneurship articles will be published in the coming weeks from the pen of our learned friend, ex banker, legal luminary, published poet and all round nice guy,

Iguwo Ukwu

 

 

Ifeanyi Maduka is the Chief Content Strategist at ekoconnect.net with a few original pieces under his belt. He is an amateur photographer still searching for the holy grail, the killer shot. It will come.

Comments 0

Your email address will not be published. Required fields are marked *

You may also like

More From: Smart Living

DON'T MISS

Choose A Format
Story
Formatted Text with Embeds and Visuals
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF