Mr. Rajeev Thakkar discusses the challenges faced by family businesses, especially when passing on the business to the next generation. He argues that family businesses should transition to becoming a “business family” by separating the business and family aspects. This helps preserve the business if family issues arise and vice versa.

Some key challenges for family businesses are:

  • Dividing the business assets fairly among multiple heirs when the business itself cannot be divided easily.
  • Accurately valuing the business assets, which is difficult for unlisted private businesses.
  • Deciding who should run the business – the most capable person or a family member?
  • Dealing with family members who are not interested in the business.
  • Handling disputes and differences of opinion between family members.

He argues that diversifying investments beyond just the family business helps preserve wealth in the long run. Concentration works while building wealth but not for preserving it. He also stresses the need to reward family members working in the business fairly and distinguish between ownership and efforts.

In summary, for family businesses to succeed across generations, they need to professionalize and transition to a “business family” model that separates the business and family aspects while maintaining a symbiotic relationship.

Download the presentation here:

Rajeev Thakkar

He is the Chief Investment Officer of PPFAS Mutual Fund.

Regarded by many as a polymath, his presentations, cover diverse topics ranging from the state of the shipping industry, corporate leadership, capital allocation and individual companies like Google. His audience usually takes to him wholeheartedly, as he possesses the endearing quality of 'talking to' them and not 'talking down to' them. Apart from them, certain presentations may be made by a few of their colleagues on account of them being well versed with a specific topic.

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