Resilience for Family Businesses

Take action now rather than allow yourself to become vulnerable.

“Family” does not protect you against crisis. Our E3 resilience formula does, though. Because in applying it, families are acting rather than reacting.

Struktur Management Partner has analysed its experiences gained in the course of hundreds of difficult projects, and worked out what it is that increases the resilience, i.e. resistance and future viability of family businesses. We have found that companies with an optimised power structure between family and company are particularly resilient and able to operate successfully. Vision helps.

How resilient is your alliance of owner family and family business?

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Your E3 resilience

Our assessments give owner families numerous recommendations for action, as well as providing them with relevant, solid key figures for the establishment and control of an effective family, resilience (or crisis) and corporate management strategy.

We take a close look at the structures and processes in the owner family, in the company, and between the two – structures and processes that both create and safeguard the resilience and future viability of this alliance.

With the E3 resilience cycle, members of owner families, both (operationally) active and non-active shareholders and the next generation have a methodology at their disposal for the optimum alignment of the alliance of owner family and family business. But addressing these issues can also help advisory boards, lawyers, auditors and tax advisers who, as confidants of the owner family, are often involved in conflict and crisis management.

The E3 resilience cycle shows why and how a clearly modulated power and group balance logic can make family and company better able to act and thus more resilient. Asset- and pension-related matters are dealt with in a carefully balanced and considered way, as are investment and debt issues. Questions about the right business model approach, the right leadership, and the right organisational and process landscapes are also clarified.

From experience to recommendation:

From the many successful projects we have carried out over the years, we know that one pattern in particular always has adverse effects:

when the interplay of ownership, influence and decision-making power (E3) is unbalanced or not institutionally regulated. In this situation, non-”constructive” conflicts are inevitable. Over time, these cause or exacerbate crises in the family business.

We thus recommend that owner interests, opportunities to exert influence and holders of (operational) decision-making powers

are initially considered separately,
and then institutionalised by investing them with an ideal role and character,
so that ultimately, powers are clearly defined and separated, and a form of checks and balances is created with a view to mitigating conflict and crisis.

Konrad Fröhlich, co-author of the E3 resilience cycle for family businesses and the current guidelines:

“Now is the time to check the resilience of the company.”

*Only in German

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Contact

Jessica Hirsch Partner Diploma in Business Administration

Konrad Fröhlich Senior Partner Attorney-at-Law

Family stress test Quick Check with immediate evaluation
Stakeholder management Read article by Georgiy Michailov here
Radical leadership and conflict management Our recent interview with Dr Reinhard K. Sprenger
Targeted enhancement of corporate resilience Preventive Restructuring (StaRUG)
Crisis management and crisis resilience for family firms Order the latest updated practical guide here
How owners of family firms do crisis-proofing Read the recent Handelsblatt article here