Ken McCracken
Ken is recognised as one of the leading family business consultants in Europe. His work focusses on helping family businesses and family offices create the type of governance that will help them to achieve their version of success.
Ken is also actively involved in advocacy to improve the overall awareness of the economic and social contribution made by enterprising families. He a Fellow of the Family Firm Institute (FFI), the leading international organisation for family business professionals and academics and is the author and teacher of the Advanced Certificate in Family Business Advising for the Society of Trust and Estate Practitioners (STEP). He is a past recipient of the FFI Award for Outstanding Interdisciplinary Achievement and the STEP Award for Family Business Adviser of the Year.
Practice Area
Panel
- Contributing Author
6 Contributions by Ken McCracken
PRACTICE NOTES
Advising family-owned businesses on employing relatives: governance and policy design, recruitment and promotion processes, succession and transition planning, remuneration, and strategies to manage nepotism and role-misfit risks
Conventional business norms do not always suit a family enterprise in practice; for example, many organisations regard nepotism as an unethical practice. The company and its stakeholders must be fully safeguarded against unsuitable relatives commanding excessive salaries and the ripple effects such appointments create across the wider workforce overall. Yet within a family firm, an individual may still favour recruiting kin for reasons such as:
trust—family members can be trusted to carefully safeguard the long-term interests of both the business and the family as a whole
commitment—relatives may show greater dedication and loyalty, working harder, for longer hours, and for lower pay, whilst still delivering a satisfactory return even if they are less skilled or formally qualified than external candidates
innovation—family can provide a fertile source of practical and highly effective new ideas to grow and develop the business further, as they often best understand what the enterprise represents to the family
long-term view—family members frequently demonstrate sustained, long-term commitment to the business, which many stakeholders would indeed welcome
Why is a family in business?
It is crucial to recognise that differing perspectives on employing family members reflect differing reasons for a family deciding to be...
Corporate
PRACTICE NOTES
Family business constitutions: from unwritten norms to codified governance—guidance for lawyers on boundaries, roles, conflicts, and aligning shareholders' agreements, employment policies and succession/estate planning
There are different types of family constitution:
unwritten
written or part-written
codified
Unwritten family constitution
Many family enterprises operate without a documented constitution. Stakeholders often characterise governance as simply ‘how we do things round here’, and they will assure outsiders that lacking a written constitution or formal structures (for example, an active board or family council) does not equate to disorder. Everyone understands what is required of them, what they may expect of others, and they act in ways that sustain the family’s implicit rules.
These arrangements are not solely the product of intentional design or official decisions. Much of the governance of a family firm emerges organically from countless day‑to‑day interactions—within the family business and with the wider world. Over time, these encounters give rise to habitual practices that become embedded, forming part of the business’s folklore and serving as the template for how matters are handled.
An unwritten family constitution typically shows certain traits:
vision—the outlook of one or more family members that reflects both financial and emotional commitment to the enterprise...
Corporate
PRACTICE NOTES
Family business governance: separating family and ownership roles; structuring family assemblies and councils; policies and alignment with corporate governance
Principle 9
In March 2010, the European Confederation of Directors' Associations (ecoDa) released Corporate Governance Guidance and Principles for Unlisted Companies in Europe. It sets out 14 principles that family enterprises can adopt in a staged or phased way to shape a governance framework suited to their needs, considering the company’s size and the ownership group’s complexity.
Principle 9 champions sound governance in family-controlled businesses and recommends putting in place family governance mechanisms that encourage coordination and mutual understanding amongst family members, whilst also organising the relationship between family governance and corporate governance.
This reflects the long-accepted view in the family business field that any strategy seeking to optimise a family’s financial, intellectual and social wealth must include practical guidance on governing the family well. Yet the ecoDa guidance unfortunately blurs ‘family’ with ‘owners’. These are separate interests that require distinct governance: not all family members will be current owners, and not all owners will necessarily be family...
Corporate
PRACTICE NOTES
Family business ownership governance: owner attitudes, dividend policy, bloodline versus spousal ownership, working and non-working shareholders, wills alignment, dilution and branch structures, trusts and trustees, shareholders' assemblies and councils
The examples in this Practice Note draw on a privately held UK company, although similar considerations arise for families holding alternative assets or operating businesses in other territories. Ownership governance for a family enterprise entails the family reflecting on core beliefs about ownership, then documenting these through legal agreements. For details on how to put a formal framework around a family-run company, see Practice Note: Formalising the family business: the advantages a formal structure can bring.
Value-out owners or custodians?
There is a clear divergence in outlook between two owner archetypes in a family firm.
Value-out owners commit while short- to medium-term financial returns are adequate. If those returns fail to appear, they will, like any rational investor, seek to dispose of their shares and reallocate capital to better-performing opportunities.
Custodians (or stewards), by contrast, care about the careful, long-term growth of the family’s assets, often over a generation. A custodian is typically prepared to balance immediate personal gain against other...
Corporate
PRACTICE NOTES
Family Business Succession Planning for Lawyers: A Staged Framework - Preparation to Implementation, Stakeholder Roles, Timing, Resistance and Pitfalls
In family enterprises, succession is a complex, multi-faceted journey, not a one-off moment. The enduring challenge is to balance the interests of the owners, the business itself, and the wider family and its interests. It requires input from advisers with diverse technical specialisms and backgrounds; to help them collaborate effectively in the family firm's best interests, it is useful to view succession as moving through a series of distinct, successive stages over time. If any stage is overlooked or poorly handled, the transition may stall or prove unsuccessful. The phases are preparation, disengagement, exploration, choice and implementation, and the tasks within each are set out below.
Preparation
In readiness for transferring the family business:
the family must acknowledge and accept that change is unavoidable
they should invest in learning from what other families have done and gather information and insights on the latest thinking relating to planning and family business governance; there is a great deal of exciting work being done in this field at present
identify the events that will trigger the transition process and seize them as an opportunity to start the work
...
Corporate
PRACTICE NOTES
Selling the family business: a practical guide for legal advisers on timing, ownership options, risk, valuation, negotiations, warranties and indemnities, trustees, employment, property and family buyouts
Choosing whether to sell a family business, and deciding on the moment to do so, are among the weightiest calls a family may encounter. Some set out in enterprise with a future sale as the ultimate aim from the outset, while others arrive at this possible end to their commercial journey because they cannot see any other practical response to the question, ‘what comes next?’ However a family reaches the stage of debating a sale, the steps outlined below can support them in reaching the soundest possible conclusion for their circumstances.
Timing
External market conditions can, to a degree, shape when the decision is reached—for example, a buoyant deals market or consolidation within a sector. Yet internal dynamics are just as significant for effective planning, and they tend to lie more directly under the family’s control.
Ownership matters
What if the next generation are neither inclined nor equipped to assume leadership—does that render a sale unavoidable? If the family would not view it as a ‘family’ business without a relative at the helm, then when no-one both able and willing is available to take the role, perhaps the time has come to sell. The other option, in such circumstances, would be to recruit...
Corporate
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