Engaged Ownership is a succinct, fascinating and well-written treatment of a complex subject. Amelia brings a unique vision to the work; she comes from a fifth-generation family business and was a trust lawyer and family advisor before running her own family's business for over a dozen years. She now works with families on governance issues and is very much engaged in the process which is the subject of the book.
Joseph A. Field, Of Counsel, Withers Bergman LLP
Amelia has written the essential Owner's Manual for the family enterprise. This book is an indispensable resource for family business owners, operators, and shareholders, as well as those who work with them.
Jonathan H.F. Crystal, Executive Vice President, Crystal & Company
Amelia draws upon her personal and professional experiences to demystify the complicated and oft-misunderstood realm of family business. Engaged Ownership is a must-read for family business owners and financial professionals who work with these families.
Kurt Miscinski, President, HPM Partners
Copyright © 2016 by Amelia Renkert-Thomas. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Names: Renkert-Thomas, Amelia, 1962-
Title: Engaged ownership : a guide for owners of family businesses /
Amelia Renkert-Thomas ; foreword by Kenneth McCracken.
Description: Hoboken : Wiley, 2015. | Includes index.
Identifiers: LCCN 2015036765 (print) | LCCN 2015041896 (ebook) |
ISBN 9781119171133 (hardback) | ISBN 9781119171171 (ePDF) |
ISBN 9781119171157 (ePub) | ISBN 9781119171171 (pdf) | ISBN 9781119171157 (epub)
Subjects: LCSH: Family-owned business enterprises. | Small business— Management. |
BISAC: BUSINESS & ECONOMICS / Small Business.
Classification: LCC HD62.25 .R46 2015 (print) | LCC HD62.25 (ebook) |
DDC 658.02/2— dc23
LC record available at http://lccn.loc.gov/2015036765
Cover Design: Wiley
Cover Image: © 751/iStockphoto
To Jacob, Harry, Herman, J. Steven, Rachel, Ken, and Guy—entrepreneurs, teachers, partners.
And with deepest love and thanks to JSR for teaching me that if you don't like the game, change the playing field.
The genesis of this book was Amelia's characteristically practical way of expressing the question that every enterprising family needs to answer at some point: What do the owners value about their enterprise?
Note that this question is not the same as How do the owners value their enterprise? When the question is framed that way discussion tends to focus on just the financial value and provokes a debate about which valuation method should be used. However, as every enterprising family and those who work with them know, a financial valuation provides only a partial answer to the question. So that is not good enough.
This is because one of the distinguishing features of family enterprises is that the owners attribute value to nonfinancial objectives. What they struggle with is how to identify, discuss, and enumerate these types of capital so that they can agree how to value them.
This book gives owners of a family enterprise a new way of dealing with these issues. It is based on what Amelia and I have learned from working together with family enterprises in different parts of the world over many years, but it is also of personal interest to Amelia as one of the owners of a fifth-generation family business. Using this extensive professional and personal experience, Amelia has been able to describe the different types of capital that a family could have invested in their enterprise, and for this she has coined the immensely useful term, core capital.
One of the refreshing aspects of this work is the way it highlights the important role of owners. Often ignored and even maligned as a problem in family enterprises, it is in fact their responsibility to become engaged and to enumerate the core capital of the enterprise. They also need to establish the forums and policies that will bring this all to life, which might include a new balance of power between owners and management that is very different from other types of business.
The concepts of engaged ownership and core capital will make immense good sense to family enterprises and their advisors. Unfortunately, it is unlikely to make as much sense to those who think that family businesses should all become more like public companies. In those companies, owners provide financial capital and power is concentrated in the hands of management. Short-term shareholder value remains the paramount goal no matter how much effort is made to fit in other types of return. This simply serves to illustrate that the reality of ownership in a family enterprise is fundamentally different from the public company model.
The importance of core capital and engaged ownership is ever present, but both will naturally come to the fore at critical junctures in the life of a family enterprise, such as during succession.
For example, when the original entrepreneur or wealth creator is passing on the product of their life's work, the notion of core capital will help the family to value the overall meaning of this inheritance. In later generations, the owners' ability to become engaged owners who can discuss and evaluate their core capital in a calm and rational manner will be vital to the continued success of the family and their enterprise. Even slight, unresolved differences of opinion among relatives could cause the type of rancorous conflict that destroys everything that a family has invested in their enterprise, meaning their relationships and reputations as much as their money.
These realities highlight the importance of understanding inherited ownership. Passing on ownership matters more in family businesses than other types of business because, to use Amelia's term, the inheritance represents the core capital that the family has already invested in their business as well as their hopes for the future.
It is important, as Amelia has done, to look at the effect of different types of ownership and not treat owners of a family enterprise as a homogeneous group. For example, how does a family ensure that a trust that holds shares will be aligned with their overall understanding of core capital and that the trustees will be effective as engaged owners?
Changing perspective, external investors in a family enterprise should seek to understand the core capital of the family owners and the ways in which they operate as engaged owners rather than make the error of trying to fit the family enterprise into another model of business, whether that be the public company or any other type.
This book is a significant and timely contribution to family enterprise knowledge and practice. It is an enjoyable read that will benefit families and advisors who are able to embrace new ideas in pursuit of improving their understanding of the fascinating and complex world of family enterprises.
Ken McCracken
International Family Business Consultant
United Kingdom
August 5, 2015