Managing Family business Disputes
Family business disputes can lead to a premature exit by a key player. If the dispute is not resolved quickly and effectively, it may lead to a breakdown in communication and a loss of trust among family members. The result is that one or more family members leave the business or sell their shares, potentially leading to a significant change in the ownership structure and management. Ultimately, a change of direction, passion, and in some cases, family members hold long-term personal grudges toward each other.
Ultimately, the decision to exit a business due to a family dispute will depend on the individual circumstances and the parties involved. We are watching one of the most significant disputes the world has seen between the Royal Family. Was there an easy way
What causes a family dispute in a business
Communication – money – greed – bad egos –
Family business disputes in a business can arise from a variety of factors, including:
Differences in vision and goals: Family members may have distinct visions and goals for the business, leading to conflicts over the company’s direction and strategy.
When family members have different roles and responsibilities within the business, they may compete for control and decision-making power, leading to conflicts/
- Poor communication can lead to misunderstandings, resentment, and mistrust among family members, which can ultimately lead to disputes.
- Unequal contributions: If family members feel their contributions to the business are not recognised or valued, it can lead to resentment and conflict.
- Succession planning —the future of the business — can be a complex, emotionally charged process for families, particularly when multiple generations are involved.
- Personal issues: Family disputes outside the business, such as financial problems, marital issues, or personal conflicts, can spill over into the business and create tension.
It’s essential to address any conflicts or issues within the family early. The earlier, the better! This will prevent them from escalating into more serious disputes. Seeking the help of a professional mediator or advisor can also be helpful in resolving family disputes in a business. Family Business disputes are often driven by money and power. They can play out among staff and affect profitability and the day-to-day functioning of the business. A great resource on disputes and mediation can be found here.
Can Family Business disputes be avoided?
While it may not be possible to avoid family disputes in a business entirely, some steps can be taken to minimise the likelihood of conflicts and to manage them effectively when they do arise. Some strategies to consider include:
Establishing clear roles and responsibilities. Defining each family member’s role and responsibilities within the business can help minimise confusion and competition for control. As a family, work out who is suited for what. We all hear the stories: for example, that my brother Bill is the marketing director for the business, but he hasn’t got a clue what he’s doing.
The Family Vision
Developing a shared vision and values. Creating a shared vision and values for the business can help align family members and minimise disagreements about the company’s direction.
Establishing effective communication channels: Open, clear communication is essential for managing conflict in a family business. Establishing regular communication channels and setting expectations for communication can help prevent misunderstandings and minimise tensions.
Creating a governance structure for your family business. A formal governance structure can provide a framework for decision-making and conflict resolution, helping to manage conflicts fairly and transparently. Ultimately, managing family disputes in a business requires a commitment to open communication, shared values, and a willingness to work together to find solutions. By taking proactive steps to minimise conflicts and address them effectively when they do arise, family businesses can navigate the unique challenges and opportunities that come with working together as a family.
According to Google, one of the most famous family business disputes in Australia
Is the legal battle between the heirs of the late Kerry Packer, one of Australia’s wealthiest men and media moguls, over his estate? When Kerry Packer passed away in December 2005, leaving behind a fortune estimated at over AUD 6 billion. His estate included a 37% stake in Consolidated Media Holdings, which owns stakes in various media companies, along with other assets.
Following Kerry Packer’s death, his son James Packer and daughter Gretel Packer became embroiled in a legal battle over their father’s estate, with James claiming that Gretel had received an unfair advantage in the distribution of the family assets. The dispute was settled in 2007, with James reportedly receiving a larger share of the estate than Gretel.
When it becomes relentless and you feel financially screwed!
Geoff has helped many clients resolve financial disputes. His meticulous pursuit of helping his clients is why he is often sought to prepare evidence, identify inequities, and offer a pathway forward. Unfortunately, family disputes can continue for years. Don’t hesitate to get in touch with us if you need a strategic approach to help you manage your dispute with your legal team and family members and achieve an equitable result.
