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Choosing the Right Advisor for Your Family Business:
Make Sure you Ask These Questions!

Did you know that only about one third survive as family owned businesses into the second generation and only 12% make it to the third generation? With this in mind it is clear that they deserve and require expert advice from uniquely qualified and trained advisors.

Freud once said that all we need for happiness is 'love and work'; both are at stake in family businesses; they have much to lose and much to gain. Yet, surprisingly, family businesses often don't ask the right questions before they hire an advisor or consultant and end up with advisors not equipped to deal with the complexities they face. As one business owner (family business, by the way) claims, an 'educated consumer is our best customer'.

One question often neglected is "How will you work with other professionals involved?" Increasing number of family businesses are turning to a variety of specialists, rather than placing all their personal, financial, and legal affairs in the hands of one person. Advisors are also realizing that families in business have uniquely complex issues that require the services of more than one professional. They also are more likely to want one trusted advisor to coordinate the other professionals. There are several models of consulting teams, based on how they work together, the level of coordination and their commitment to each other. Here are several categories of consulting teams*:

  • Interdisciplinary - pre-existing team/firm
  • Multidisciplinary - advisors in study group, know each other's work
  • Accidental - connect only through client, work together with little coordination
  • Dysfunctional - unknown to each other, even if working with same client, no coordination

*Hilburt-Davis & Dyer. Consulting to Family Businesses, Jossey-Bass/Wiley, 2003.

As family businesses become more sophisticated and aware of best practices, they will and should ask and expect more of their advisors. The following questions should begin any client /advisor relationship:

Questions to Ask a Family Business Advisor

  • Have you received special training in working with family businesses? If so, where and what?
  • What issues to you see in the family, business and ownership systems?
  • Can you provide us with references?
  • How would you help us deal with them? Where would you start?
  • What is the scope of the work? What will it cost?
  • Do you belong to a professional society or group that delivers continuing education focused on the special challenges of family businesses? Do you participate in these?
  • Do you have a network of professionals who you can call on to help you with the complexities?
  • Are you willing to work with my advisors? How will you prevent the 'team' from becoming dysfunctional?

    If you don't get satisfactory answers to these questions, keep looking!
   


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