Case studies

Succession planning in a UK farming family

The benefits of creating a family constitution

Deloitte’s Family Enterprise Consulting team has deep expertise in supporting clients with generational ownership transitions. In this example, producing a family constitution was an integral part of creating a successful ownership succession plan.

The challenge

Deloitte’s Family Enterprise Consulting team were approached by the founder of a UK farming business who needed assistance with ownership succession planning. The founder was unclear about how to distribute his assets amongst his children, some of whom worked in the business and some of whom did not.

Additionally, as those working in the business became more involved, the founder had difficulty ‘letting go’ and did not know how to give his children the space they needed to have a meaningful impact.

To further complicate matters, the roles and responsibilities of the next generation working in the business were unclear, and the family had never discussed their long-term vision for the business. There was also no agreement between family members about how they should make decisions together.

Our approach

To assist with the problems above, Deloitte’s Family Enterprise Consulting team:

  • Conducted a review of the business’ current ownership arrangements and plans for the future, before meeting with the founder privately to discuss his personal aspirations for the business and outline different asset allocation options regarding his children;
  • Interviewed each member of the next generation (and their spouses) individually, to gain a detailed understanding of their perspective on their roles and responsibilities within the business and discuss their personal aspirations;
  • Facilitated a two-day family meeting at which the founder explained his plan for gifting assets to the next generation, and guided discussions during which the family uncovered their vision for the future, values, and, with our guidance, agreed on a structure for collective decision-making;
  • Designed and produced a draft ‘family constitution’ in order to document the family’s agreements, including detailed descriptions of the roles and responsibilities of the next generation;
  • Organised and facilitated a second two-day meeting to review the draft constitution, agree on a final version, and worked alongside the family to develop a plan to help the founder transition to a non-executive position in the business.

The outcome

The process of creating a family constitution led to several significant outcomes. Foremost, the founder made a transparent decision about how to split his assets between his children, and successfully communicated it to the family. This enabled the family to focus on business performance rather than being distracted by ownership issues.

Role descriptions were also agreed for each of the family members working in the business, and a plan for the transition of the founder to non-executive director was laid out, with specific actions outlined for both the founder and his children. By ensuring clarity over their roles and responsibilities, the family significantly reduced their potential for future conflict, building a platform for long term commercial success.

Finally, the family defined their vision and values, and established protocols for working together and making collective decisions. This enabled them to be nimble and react quickly as their business develops into the future.

Our expert says…

‘It is important not to underestimate the power of creating a constitution together as a family. By focusing on the core elements of vision, values, and decision-making protocols, families establish a blueprint for navigating future challenges efficiently and harmoniously, without the need for further external assistance.’

Peter Leach, Partner, Family Enterprise Consulting

Find out more

To learn more about the benefits of creating a family constitution, get in touch with our Family Enterprise Consulting team.

For further insights, read our weekly Family Enterprise blog.

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