FAMILY BUSINESS AND RESTRUCTURIN

Family businesses have existed since centuries and they come in the form of a small, medium or large-scale business that cuts across almost all industries. In the last decade India has seen a peak rise in the success of family business, with a higher growth prediction going forward.

?Yet, in India’s complex environment, with the pulls and pushes of business prerogatives and challenges, sustaining of businesses, is tricky.

The pandemics and its pertinent threat have increased the need to restructuring of the family-owned businesses. An important trigger has been the urgency of shielding a business from a sharp dip in cash flows and no prominence on future income in an uncertain economy. ?

Technology-led disorders and deviations were already creating challenges for businesses across sectors. The current pandemic and the ensuing new normal has accentuated these urgent calls to action for business families.

Family businesses have started seizing this moment to review and reorganize their organizational structures.

To list down a few challenges that family-owned business face, are closed knit top management, which might lead to orthodox and single perspective towards solutions, unorganized structuring, lack of vision and growth concepts, and less adaptiveness to technological advancements.

Introduction of restructuring ensures that family members can meld around new ways of doing business, impactful investing, inclusive yet role bound decision making, infusing technology and growth strategies.

With the next generation coming in, and the ever changing digital environment, businesses need to re-align in a much transparent structure which allows each member to work in a autonomous manner yet have a common vision for the company.

Family business have based their foundation on values and ethics, and close bond with family members at their epicenter. Critically, it’ll help family members to see and understand the vision and its execution. Guidelines may also be laid out on how to build accountability and/or incentives for these active family members in their respective roles, create backups and invest in professionalizing over time. A proper reconstitution can help align different parts of the business, mainly operational and structural restructuring.

Restructuring can really prove as an important and effective decision for family businesses, selecting the correct model, which can include an arrangement of family trusts, shareholders’ agreement and the structure of a family office to ensure its appealed and preferred implementation. Selecting the right model will depend on the intricacies of the organizational structure, tractability amongst family members as well as on the capacity for change within the organisation.

Restructuring will help align the traditional family-oriented outlook, with the technology advancements and necessary transformations vital for the growth.

It is thus clear that restructuring can assist businesses to achieve strategic objectives for a stable and progressive future.

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