A will and a way

The saga of feuding brothers Mukesh and Anil Ambani, who have waged a series of epic legal battles since the 2002 death of their father, Dhirubhai—patriarch of India’s giant Reliance empire—is an extreme example of what can happen to a family and its business when the leader dies without a will.

Yet for business owners, a will is not enough, even if all surviving family members agree on who will succeed the deceased as head of the family enterprise. Too many grieving successors have had to shuffle through their parents’ papers in an effort to uncover operational details that the parents had kept close to the vest.

When a strategic plan is in place and essential functions and procedures are documented, the transition to a new CEO is much easier. The successor and his or her team must assure customers and suppliers that the company plans to remain in business and will continue to pay its bills. In order for these assurances to be convincing, the successor must have access to important information. A company’s outside partners need to have confidence in the entire organization, not just in one mortal individual.

Years ago, a family business successor told me of the panic she felt as she realized, three days before her father’s death, that he was the only signatory on the corporate accounts. She needed signing authority—fast. The successor, who had been working outside the business (on the other side of the country), recalled how she and a family member used their power of attorney to appoint themselves corporate officers and give themselves financial authority before her father’s passing. The support of the company’s bank—which could have frozen the accounts—was essential, she said.

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This successor struggled to plan the company’s next steps during an extremely stressful time for her family. Her father, who had had no idea he was seriously ill, was diagnosed with terminal pancreatic cancer just two weeks after the family had gathered to bury his wife.

Her father’s estate planning had been minimal. With emotions running high and business pressures looming, she and her siblings could have engaged in destructive infighting. Fortunately, they all recognized that the business was an asset of their father’s estate that needed to be preserved. The next-generation leader took care to keep her siblings apprised of the company’s progress and financial condition. Whether a family intends to continue running its business or to sell it after the death of the leader, infighting will only serve to decrease its value.

About the Author(s)

Barbara Spector

Barbara Spector is Family Business Magazine's editor-at-large.


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