Succession for a fourth-generation manufacturing group

The company was profitable and well run. Its ownership was not. The shareholders' agreement dated from 1974, when there were six shareholders and all of them worked in the business, and it provided no mechanism for a shareholder to realize value without a sale of the whole.

Two family branches wanted liquidity. A third regarded any redemption as the beginning of a sale process. The chief executive, a member of the fourth generation, had been managing the disagreement personally for three years.

We declined to begin with documents. The first four months were spent establishing what the family actually agreed on, through structured sessions with each branch, and producing a written statement of shared intent that all thirty-one shareholders signed before any drafting began.

The legal work followed from it: a new shareholders' agreement, a family council with defined information rights, a valuation methodology fixed in advance, and a redemption facility funded from a defined proportion of annual distributable profit.

We were explicit with the family that the redemption facility would be inadequate if more than two branches used it simultaneously, and documented what would happen in that case rather than leaving it to be discovered.

Two branches redeemed in the first eligible window at the pre-agreed valuation. No proceedings were commenced.

The family council has met quarterly since its formation. The chief executive is no longer the mechanism through which family disagreements are resolved, which was the outcome the engagement was actually for.