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Planting the seeds of success: Creating an enduring legacy

Many founders of successful businesses would seek a successor rather than put the business up for sale. In such cases, families are encouraged to start planning well ahead of any shift in control to later generations.

Family businesses stem from the unique vision of an entrepreneur, brought into fruition through years of sacrifice, dedication and hard work. The personal involvement in management, control and ownership makes the family business different from a normal corporate in a few ways: family members taking key roles, unique culture and traditions which shape the business brand, potentially complex ownership arrangements, and the intangible aspects of relationships which are not as easily passed on – these have impact when we speak of family business transitions and legacy creation.

“When working on family business succession, it is as important to focus on the family, besides the business. Family dynamics; the relationships between the generations and the individuals contribute to a complexity that is already there when talking about succession,” Given the complexities, families frequently ask us when and how should a family start to plan for business succession” says Alan Beattie, global head of private wealth solutions at HSBC Private Banking.


Succession planning requires a disciplined approach, while taking into account the different personalities, interests, goals and abilities of the individual family members.

“A 70-year old thinks very differently from a 30-year old, and there is an art around the managing of emotions,” says Beattie. Cynthia Lee, managing director, regional head of private wealth solutions, Asia-Pacific at HSBC Private Banking explains that an adviser, such as HSBC Private Banking, could support by bringing a neutral and independent perspective through family governance, where specialists work with families to dialogue in a structured manner, leading to a family constitution which can provide a roadmap for the way forward.

When the strategy for the family is clear, implementation can take place, be this the set up of relevant asset holding structures, reviews of existing wills, setting up of family offices or philanthropic foundations, private funds for new family ventures, besides professionalising investment management.


“Our experience tells that many founders would seek a successor rather than put the business up for sale,” says Beattie. However, not all younger generations want to take over the family business. “We have seen many instances where the next generation would rather do something else,” says Beattie.

In such cases, families are encouraged to start planning well ahead of any shift in control to later generations. “Committing to a plan early in the process is key to a successful transition,” says Lee. An effective plan will take time to be developed, agreed upon by the key stakeholders, and communicated to all who are involved in the business. Additionally, grooming younger members for leadership is a process of years.

Typically, the first step in succession planning is to assess the stage of the family business. “If it is a founder generation, a lot of the planning goes into how do we move from his generation to the second generation, and it may be a single decision-making model or a multiple-person decision-making model,” says Lee.

“You could also be looking at four or five generations; some even six and seven with well over 100 family members. That takes the whole planning exercise to a different scale,” she adds. Beattie stressed the need to bring discipline to help build consensus when many are involved in succession planning.


In cases where there are conflicting interests and disagreements, family governance will centre on what unites the family.

The values and the legacy that the family wish to build for future generations become the focal point of discussions, according to Beattie. “A consensus around family values and a common vision for legacy will facilitate implementation because you have an anchor that allows families to frame their decisions and choices around what is core to their identity and purpose.” says Beattie.

The implementation of succession plans is typically easier for families who have great respect for their matriarch or patriarch. “It can be easier in such instances to shape the way the legacy that the family wish to leave behind,” says Beattie.

Impact investing and philanthropic ventures are also ways by which families could manifest their values and leave a positive legacy, says both Lee and Beattie, and these are topics which next generations have shown interest and passion in.


On resolving inter-generational gaps, family members are encouraged to recognise and embrace their differences. Beattie says: “Families should take advantage of the human capital of the family – the experience and the knowledge of the earlier generations as well as the energy, the enthusiasm, the ideas and beliefs that a younger generation may bring.”

Beattie cited an example of a patriarch, who said in a recent meeting that he should have involved his children in his consumer-led business at an earlier stage because the younger generation is more attuned to the latest trends and fads. “Different perspectives are good for business,” says Beattie.

Other forms of human capital include social and enterprise capital, says Lee. As Asian family wealth rises, many of the younger generations are overseas educated and have their network of friends. Many are “entrepreneurs in their own right, and they can collectively bring a lot to the family business,” Lee adds. Their engagement is “vital to ensure an effective transition of the family business from one generation to another,” she says. Sometimes family members are appointed as shadow and junior board members before they take over officially as the leader of the family business, she explains.

On the optimal number of family members who should be actively involved in decision making, Beattie says, “there can’t be too many or too few involved; you just need to find the balance.” Lee adds that not every family member wants to participate actively, and some prefer to be kept informed and pursue their interests.


While wealth preservation is one of the goals of succession planning, the preservation of family harmony cannot be missed – with these twin goals, it is thus a long-term process and an evolving exercise. Succession plans should be implemented in stages, according to Lee and Beattie. “We can’t say we are done after we have a constitution, two-family meetings and one retreat,” says Lee. She added that there isn’t a one-size-fits-all solution because each family is different. Crucially, honesty and transparency are essential drivers for success, Lee stressed.

In many ways, technology has helped facilitate the dissemination of information, which improves transparency and communication.

“The amount of reporting can be challenging, and families need a holistic view of what they own or do not own. Technology can help by providing a consolidated view of their financial position,” says Lee. In addition, given the spread of family members across the globe, technology is useful to facilitate communication and connection, and to coordinate family member activities. A situation where future leaders and family members have limited knowledge or are making decisions in isolation and given few choices over the matter of business succession, can sow the seeds of disputes.

On the potential of rapid technology changes impacting businesses cycles and the bottom line, both Lee and Beattie said that succession planning is not unduly influenced by business volatility. “Bringing new technology into a traditional business will help it to remain a relevant business, and sustainable business generally leads to sustainable families,” says Beattie.

The sustainability of a family business and its legacy depends on long-term planning. Families should think ahead and begin the process earlier rather than later, advised both Lee and Beattie.

This document is not a personalised communication from HSBC to you, and does not constitute and should not be construed as legal, tax or investment advice or a solicitation and/or recommendation of any kind for any product or service. Your decision to invest should not be based mainly or solely on this document. All investments involve risk. The value of investments may go up or down, and may become worthless. This document does not consist of independent investment advice, and is published by The Hongkong and Shanghai Banking Corporation Limited and HSBC Trustee (Hong Kong) Limited.

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