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10 FEBRUARY 2021

Family Office (FO) by CC Advisory is a Blue Ocean services rendered towards high-networth individual to preserve and protect their family wealth. Family Office also able to provide succession planning in order pass their wealth to the next generation and more generations. Just like the adage goes “Wealth Doesn’t Last for Three (3) Generation”. The objective of Family Office is to break this curse. 

 

On 10 Feb 21 (Wednesday), a day before CNY eve, our family office team visited our family office customer Mr. Yee & Mrs. Yee (not their actual name) and presented the hampers. We also took the opportunities to update their investment updates in Australia, their company financial statement as well as bank account holding as Mr. Yee is delegating most of the jobs to our team. Also, we provided timely update of his IFAST investment in Malaysia. To his surprise and satisfaction, his investment has increased 16% just merely 3 months. Obviously, he was very pleased and agreed to put in another RM1 million as he is positive about the market outlook for the next 12 months as well as agreed with our investment proposal.

 

On top of that, he further made additional AUD50,000 investment into an Australian property funds and explored to purchase two residential properties to add into his current property portfolio. Our total fees for those deals start from RM30,000 to potential up to RM210,000. 

14 DECEMBER 2020

In the book “Complete Family Wealth” authored by James E Hughes, Susan E. Massenzio and Keith Whitaker, there is a story about Marshall Lyautey, who was one of Napoleon III’s greatest generals, was famous for having the most beautiful gardens in France. One day as he and his head gardener were looking over the estate and the great trees planted there from all over the world, Lyautey said to the gardener “I see no Copper Beech tree.” The gardener replied “Mon General, it takes over 150 years to grow a Copper Beech tree.” The Generals response was immediate “Then we have no time to waste, we must plant today.”

Last week, I was invited to visit one of the largest motorbikes group in Melaka to do a presentation of Family Office concept towards 10 siblings of the second generation of family leaders in the family. After the presentation, I ask them “why you need family succession planning?”  I only received lacklustre responses from some of them. After the presentation, the youngest leader and who is the de-facto CEO of the group pulled me aside. He said to me “Mr. Ng, I must start family succession planning immediately with no more delay”. He continues with belief “I will convince all the brothers and sisters”. I turned to him and said “You are about to plant a Copper Beech tree, Mr. CEO’. Both of us smiles.

11 DECEMBER 2020

Family dispute happens when different generation or same generation of family members are engaging in disagreement on matters related to family or business, which in turn causing tension among family members. If family dispute isn’t solved timely, it could cause severe family disharmony and conflict.

Last Monday, through introduction of my colleagues, I visited a famous family coffee business in Johor. They produce local coffee beans and market their own coffee brand.  They also run a traditional café chain stores in various townships of Johor that serve authentic and traditional brew coffee, home-made toast and half-boiled eggs.

The moment I sat down with the second-generation leader of the family who are the CEO of the family business but without a single share or ownership of the company (note: this is a typical ownership structure of local multi-generation family business). He showed dissatisfaction of the commitment of his cousin brothers and sisters who involve in the family business. He has expelled some of non-performers out from family business. Obviously, his action has brought displeasing among his uncles and cousins.

In this case, family government is crucial in handling family dispute as it sets the clarity about the decision-making in the specific area of family members performance in business and set the minimum bar for all family members to follow. Also, family government set the communication practices that all members must be agreed upon. Hence, family conflict will be managed and disputed will be minimized.

27 NOVEMBER 2020

The generation power transition of family business is a common challenging affair from different life stages of family business. It can turn ugly if not manage well when the top management hangs on the power and against the smooth transition of power to the next generation. In this aspect, Family Constitution is key to ensure a structure and smooth way for generation power transition.

Last week, I visited a new Family Office client major in plantation, poultry and commodities businesses in Pahang. This family consists of four generation family members and the second-generation family members are still at the helm.

The objective of this meeting was to initiate the Family Constitution in order to set family government and guidelines when handling family business for clear direction and avoid conflicts when handling family business. The meeting turned out to be an emotional affair as the patriarch burst into tears and cried uncontrollably when they are some arguments among the siblings and family members.

What kind of mindset the family members need?

What kind of skills the family office advisors needed to equip in this situation?

24 OCTOBER 2020

The most challenging of family business lies on moving from one generation of top management to the other. The problem surfaces when the current generation of top management hangs on as he watches others try to help manage or take over his business, while at the same time, his heirs feel overshadowed and frustrated. The success of power transition from one generation to the other will have direct impact of company growth or of stagnation.

Last month, before CMCO in KL/Selangor, I visited a major FMCG distributor in Perak. They are one the biggest FMCG distributor in Northern Malaysia with business turnover more than RM300mil.  The business managed by third generation which spans over 6 keys personnel from different offspring of second generation.

The current executive director told me that his five cousins and himself while managing the keys divisions of the company from operation to marketing, they have no actual power to decide the company policy and direction. Any major policies especially involving capital expenditures must get their uncles approval before implementation. They all frustrated. This is typical power transition problem that facing any family business.

11 OCTOBER 2020

A mid-side logistic company managing director recently asked me, “My brother and I started our business 30 years ago and our business has been going on really well ever since. Our business turnover at 2019 is RM60 mil and we have absolutely no complaint at all. Recently, we discussed about our business succession planning over the lunch table. Our shareholding structure is 60/40 basis, whereby I am having a bigger share. Our children are not interested in our business and we are facing dilemma of our business continuous. What should we do?

A sound Business Succession Planning (BSP) should focus on the 6 important factors as follows:

  • The objectives succession planning
  • Agreement of the business value
  • Events for a business owner to exit triggering a buyout
  • Funding of the buy-out
  • Transfer of the business interest
  • Distribution of sale proceeds

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