Tactical teams

By Grant C. Robinson
Illustration: John Sapsford

Collaboration with other advisers ensures that you will come up with a plan that’s best for the client

Most chartered accountants have entrepreneurial businesses as clients. These businesses, whether they are owned by one person or multiple family members, fall under the broader definition of a family business. Anyone in a business where they have to create an exit for their investment and thereby provide an entrance to other players falls under the broader definition of a family business. For CAs, there are many different issues that need to be addressed when advising these businesses.

The emerging industry of family business advisers is best captured in material produced by the Boston-based Family Firm Institute. It describes this field as one that brings practitioners from four professions of origin: legal, financial, behavioural science and management science. CAs fall under the financial category, as they have strong skills in this area. Many CAs who deal with small and medium-sized clients are beginning to understand the impact an adviser to a family business has. The graphic above identifies family business advising as covering all four professions of origin.

CAs need to decide if they will be family business advisers managing all four professions of origin or if they will be a tactical adviser executing tax plans and compliance issues with which clients must deal. While CAs can remain tactical advisers, they should have some familiarity with the family business advising field and collaborate with advisers in other fields. The challenge for the CA profession is that while CAs do receive the technical training, many clients also look to them for advice on issues impacting the entrepreneurial business and/or the family business. This is often described as deal- ing with their transition or succession issues.

The four professions of origin related to advising entrepreneurial and family businesses reflect the complexity of the client. The real-life issues of business fall into three areas: family, business and ownership. Clients have issues that fall into these areas as well as overlapping ones. The family issues are resolved using principles of support and empathy; ownership issues are resolved using fairness and equity; and business issues are resolved by using principles of being competitive in the marketplace. Different skills are needed to address the issues in each area.

The Family Firm Institute identifies the different relationships a team of advisers working with a family business can have:

• Interdisciplinary: pre-existing team/firm.
• Multidisciplinary: advisers in study group, know each other’s work.
• Accidental: connect only through client, work together with little coordination.
• Dysfunctional: unknown to each other, even if working with same client, no coordination.

For CA practitioners working with clients on transition issues, the greatest challenge is to find relationships with other advisers that work. Often advisers work in a dysfunctional relationship, which arise because they want to do what is best for the client. However, often one adviser’s idea of what is best may not be the same as another’s.

For example, take the case of a brother and sister client who wanted to build a team and set up an exit strategy that involved a family trust, estate freeze and insurance, as well as build a decision-making process more formal than what was in place. Also on the agenda for the past 10 years was a shareholders’ agreement. All these issues had been addressed and mapped out. Then a meeting with all their advisers — a CA, a lawyer, an insurance agent and a key management member — was suggested. At first the client gasped at the thought of the hourly rates but were convinced that in the long run this would be the most economical. By the end of the first meeting, the clients agreed that this was the best way to proceed.

All the advisers had copies of the previously prepared information that focused on the result for which the siblings were looking. They began the meeting reiterating what they wanted as the end result. From there the discussions moved on to the implementation.

Not surprisingly, each adviser had the same response: “No — you don’t want this result.” When they were asked to clarify their position, it was obvious that each one just wanted to give their clients the best advice. They wanted the results to be in their best interests. Each adviser had had an experience with clients who had encountered major problems in transitioning their business and they wanted to protect the client.

It was clear there was no way this brother and sister team would have been able to create an entrance/exit strategy by speaking with the advisers individually. Having everyone in the same room, all concerns were in the open and could be discussed. As a group, they became a multidisciplinary team focused on executing the brother and sister’s plan. The plan was altered and the specific tactics were drawn up and the transaction was completed in a relative- ly short six-month time frame. It was relatively short because, remember, many of the issues had been on the table 10 years. Without the joint meeting, the team would have been dysfunctional. Each adviser, despite having the clients’ best interest in mind, would have advised contrary to the execution of the plan. However, now individual concerns were addressed and a tactical strategy owned by everyone was created.

Although a multidisciplinary team was set up, it was created out of the convenience of supporting the client. But it became a team of convenience focused on the same result. It was an accidental team.

When CA advisers work with entrepreneurs and family businesses in helping them with transition issues, it is important to keep in mind the need for the different skill sets, different tactics and tools. It is also important to understand the need for collaboration.

Consider how to best help a client by collaborating with his or her other advisers to ensure the focus is on creating what is best for the client. As everyone brings a bias to the table, it is important to artic-ulate that bias and the role an adviser is most comfortable with. It is equally important to be collaborative with other advisers. Know them, know their biases and be able to form working arrangements for the benefit of the client. This can be done con- structively when the client is the focus. When you can work within a team to help a client see and then realize their future, you create value in your clients’ lives. You also create adviser teams that can come together in many forms.

Advisers must be clear on their approach to clients. Are you a generalist with knowledge of all four areas? If you are to play a quarter-back role, you need to understand process consulting. In particular, the client will need to be able to see how the different tactics come together to take them toward their result. This means giving the client time to learn and time to play a role in the process.

Are you a tactical specialist with key knowledge in the financial area? You will play a tactical delivery role with a need and ability to coordinate with other advisers. You need to play a role to ensure the client has a functional team of tactical consultants, as well as a process consultant. This applies to all four areas of financial, legal, management science and behavioural science.

Be clear on your biases. Be clear on the area of practice or role you want to play. Be proactive with the client to collaborate with the different advisers. Be part of helping your clients get where they want to go.

Grant C. Robinson, FCA, is a partner with Robinson & Co. LLP in Guelph, Ont. He is Technical editor for business adviser