This news service recently asked accountancy and advisory firm EisnerAmper about succession and intra-family governance issues, particularly in cases where a business is in play. These topics have become more urgent because of COVID-19.

There is arguably never a perfect moment to talk about estate planning and transferring assets and the COVID-19 pandemic adds an urgent, alarming new force into such conversations. Without in-person meetings because of social distancing measures around the world, these discussions are not easy, even with all the marvels of two-way video. 

The editorial team here decided to put questions to the accountancy and advisory services firm EisnerAmper, and spoke to a number of that organization’s senior figures.

Family Wealth Report: Some business succession conversations may be either put on hold, while others might be going on under conditions of heightened pressure. Clearly, the M&A sector is going to be very active, with lots of distressed firms for sale. 

Lisë Stewart, principal-in-charge, EisnerAmper Center for Family Business Excellence
Many business owners are wondering about their succession plans: “With our current crisis, the timing just doesn’t feel right!” On the contrary, there are a number of important steps that business owners can take now to make sure that they are well-prepared when this fog of confusion and sense of calamity starts to lift. 

1, Revisit your succession plan. What makes sense for you and your family today? If you were planning to retire in the near future, what key indicators would you need to see to give you confidence to set new goals? Is the person(s) you had identified for future leadership roles still the right one(s) to lead the business in the ‘new normal?’ What financial metrics need to be achieved (or re-achieved) to support your future plans?
 
2, If you were considering a stock transfer to your successors, this is a good time to re-visit. Stock prices may be lower now and the tax consequences may have changed, opening up new opportunities. This is an excellent time to speak with your financial advisor. 

3, This is a good time to think about what others would need to know if anything happened to you. Develop a Desk Plan that clearly spells who you want to take over certain functions in the business, your most important tasks and business decisions, and your plans and goals. It provides information about your business finances, key relationships and where your passwords are located. In an emergency, this could make the difference between keeping the business running and having to shut it down. We also recommend purchasing an “End-of-Life” planning booklet that includes all of the information that your family will need to know should something happen to you. This may include information about insurance and finances, estate plan, belongings and your service.  

4, Work with your senior team or business advisors to spot growth opportunities as the dust settles. There may be distressed companies looking to partner with investors. Therefore, identify opportunities that may be a good strategic fit, and be on the lookout for potential M&As. In some cases, business owners who had not been open to private equity or other investment partners may be more open to new and different types of arrangements.   

While these are scary times, planning for the future can often relieve stress by providing a sense of optimism, a chance to revisit your goals, and gain some control over your own destiny. 
 

FWR: How are family offices handling intra-family governance during this pandemic?

Natalie McVeigh, director, EisnerAmper Center for Family Business Excellence    
Five Tips for Ensuring Intra-Family Cohesion and Health in a Time of Crisis

Family offices are often how high net worth families stay informed and connected. With COVID-19, there is much uncertainty, and the family office can be a powerful force for enhancing intra-family cohesion in times of crisis. Below are five steps family office leaders can take to help family members build trust and maintain open communications. This way, the family can plan and collaborate on successful strategies moving forward. 

1, Check on everyone’s well-being. Make sure they are physically safe and provide resources for emotional well-being as stress is already regarded as a health epidemic and it is only increasing. 

2, Over communicate. A lot may be happening with the portfolio or operating companies that the family holds. This may impact dividends, employees, etc. Communicate regularly about what is going on and how the vehicle for the family’s wealth is doing. People need and want access to accurate and timely information. Uncertainty is more difficult to deal with neurologically than bad news—causing even greater stress.

3, Innovate. One of the advantages of family-held assets is that they are much more agile to change. When the family can effectively collaborate and strategize, they are more likely to identify potential opportunities, give voice to their aspirations, and develop reasonable action plans.   

4, Create regular family fun times. Use virtual technologies to share meals, drinks, movies and even games.  Loneliness (which is different from physical isolation) can set in during these times. When we feel lonely we shut down. Create new rituals to connect as well as to sustain and build cohesion. 

5, Consider philanthropy as a cohesion tool. Involving the family in charity now may offer (1) a project they can accomplish together that creates both efficacy and impact; (2) an increase in one’s own sense of well-being; and (3) a chance to make a difference that makes those involved feel more productive and hopeful. 

The key to success is to combine both the “feel-good” elements of a family office with the ability to be strategic, proactive and positively opportunistic.