Glossary

The languageof succession.

Plain definitions of the terms families, successors and their advisors use. Legal and tax terms are explained in general; the details belong with your lawyer and accountant.

#

360-degree feedback: 360-degree feedback is a process that collects views on a leader from the people around them, such as their manager, peers, direct reports and sometimes the board, usually through a structured questionnaire.

A

Advisory board: An advisory board is a group of experienced outsiders who give a company's owners and management regular advice, without the legal authority, voting power or fiduciary duties of a board of directors.

B

Board of directors: A board of directors is the group of people, elected by a company's shareholders, that oversees management, approves major decisions and appoints, supports and if needed replaces the chief executive.
Business valuation: A business valuation is a formal estimate of what a company or a stake in it is worth, prepared by a qualified professional for a specific purpose and as of a specific date.
Buy-sell agreement: A buy-sell agreement is a contract among the owners of a business that sets out who may or must buy an owner's shares, and at what price, when a defined event occurs.

C

Chair: The chair, or chairman, is the person who leads a company's board of directors, setting its agenda, running its meetings and acting as the main link between the board and the chief executive.
Chairman emeritus: Chairman emeritus is an honorary title given to a former chair of a board, usually recognising their service without giving them a vote or formal authority over decisions.
Conflict of interest policy: A conflict of interest policy is a written set of rules requiring directors, managers and family members to disclose personal interests that could affect their decisions, and setting out how those situations are handled.

D

Dividend policy: A dividend policy is a company's agreed approach to how much of its profit is paid out to shareholders and how much is kept in the business for reinvestment.

E

Emergency succession plan: An emergency succession plan sets out who takes over the leadership of a business, and with what authority, if the current leader suddenly dies, falls ill or can no longer work.
ESOP (employee stock ownership plan): An ESOP, or employee stock ownership plan, is a US employer-sponsored retirement plan in which a trust holds company shares on behalf of employees, often to buy shares from existing owners.
Executive coaching: Executive coaching is a structured, usually one-to-one working relationship in which a professional coach helps a leader improve specific aspects of how they lead, over a defined period.
Executive presence: Executive presence is the impression a leader gives that they can be trusted with important decisions, built from how they think, speak, hold composure and handle challenge in front of others.

F

Fair vs equal: Fair vs equal describes the tension in family businesses between treating every child identically, especially in ownership and inheritance, and treating each child according to their role, contribution and needs.
Family assembly: A family assembly is a regular gathering of all members of a business-owning family, often including spouses and adult children, to share information, build relationships and discuss family matters.
Family business: A family business is a company in which one family holds enough ownership to control it and intends to keep that control as leadership passes from one generation to the next.
Family charter: A family charter is a written statement of a business-owning family's shared values, purpose and principles for how family members relate to the business, sometimes used as another name for a family constitution.
Family constitution: A family constitution is a written document in which a business-owning family sets out its shared values, governance structures and rules for how family members relate to the business and its ownership.
Family council: A family council is a small group of family members, chosen by the wider family, that represents the family's interests in the business and coordinates family matters between family assemblies.
Family employment policy: A family employment policy sets the rules for whether and how family members may work in the family business, covering entry requirements, hiring, pay, performance reviews and exit.
Family enterprise: A family enterprise is the full set of businesses, assets and shared activities a family owns and manages together, often including an operating company, investments, property and a family office.
Family governance: Family governance is the set of structures, agreements and practices a business-owning family uses to make decisions together, communicate, manage conflict and keep family matters separate from running the company.
Family meeting: A family meeting is a structured discussion among members of a business-owning family about matters that affect both the family and the business, such as succession, ownership, roles or values.
Family office: A family office is a private organisation that manages the investments, financial affairs and often the administrative and personal needs of a wealthy family or a small group of families.
Fiduciary: A fiduciary is a person or organisation legally required to act in the best interest of another party, such as a trustee for beneficiaries or a director for the company.
Founder: A founder is the person who started the business, and in a family business usually the first-generation owner whose judgement, relationships and personal authority shaped how the company works.
Founder's shadow: The founder's shadow is the continuing influence a founder has over a family business after handing over leadership, often making it harder for the successor to be seen and followed as the leader.

G

Gravitas: Gravitas is the quality that makes other people take what someone says seriously, coming across as weight, composure and considered judgement rather than volume or force of personality.

H

Handover Charter: A Handover Charter is a short, written agreement between a founder and their successor setting out which decisions move and when, how they disagree, the founder's new role and how the change is announced.

I

Independent director: An independent director is a member of a company's board who has no material financial, family or employment relationship with the company, its owners or its management, and so can judge decisions objectively.
Interim CEO: An interim CEO is a chief executive appointed for a limited period to lead a company during a transition, such as the sudden departure of the leader or the time before a chosen successor is ready.

K

Key-person insurance: Key-person insurance is a life or disability insurance policy that a company takes out on a person critical to the business, with the company as owner and beneficiary.
Key-person risk: Key-person risk is the risk that a business would be seriously harmed if one specific person, often the founder, were suddenly unable to work or left the company.

L

Letter of wishes: A letter of wishes is a written statement, usually not legally binding, in which the creator of a trust or a will explains to trustees or executors how they hope their discretion will be used.
Liquidity event: A liquidity event is a transaction that turns some or all of an owner's stake in a private company into cash, such as a sale, a partial sale, a buyout or a public listing.

M

Management buyout: A management buyout is a transaction in which a company's existing managers buy all or a controlling part of the business from its current owners, usually with outside financing.
Mentoring: Mentoring is a relationship in which a more experienced person shares their knowledge, judgement and experience with someone less experienced, usually informally and over an extended period.
Multi-family office: A multi-family office is a firm that provides family office services, such as investment management, financial administration and advisor coordination, to several wealthy families at once.

N

Next generation: The next generation, often shortened to NextGen, refers to the younger members of a business-owning family who may become future owners, leaders or stewards of the family business or wealth.

O

Owner language: Owner language is the way leaders speak when a decision is theirs, such as "we decided" or "I recommend", instead of attributing it elsewhere with phrases like "my father thinks".

S

Shareholder agreement: A shareholder agreement is a contract among the owners of a company that sets out their rights and obligations, including how decisions are made, how shares can be transferred and how disputes are resolved.
Shirtsleeves to shirtsleeves: Shirtsleeves to shirtsleeves in three generations is a proverb saying that family wealth built by one generation is lost by the third, returning the family to manual work.
Single-family office: A single-family office is a private company owned by one family that manages that family's investments, financial administration and related affairs, serving no other clients.
Stakeholder interview: A stakeholder interview is a short, confidential conversation between an outside coach or advisor and someone who works closely with a leader, held to learn how that leader comes across to the people they lead.
Stewardship: Stewardship, in a family business, is the idea that each generation holds the business in trust for the next, with a duty to care for it, grow it and hand it on in better condition.
Succession plan: A succession plan is a documented arrangement for who will take over the leadership and ownership of a business, when, and under what legal, financial and governance structure.
Successor: A successor is the person chosen or expected to take over a leadership role, such as CEO, managing director or chair, from the current leader of a business.
Successor development plan: A successor development plan is a written, dated plan for how the chosen successor will become ready to lead, setting out the role, an honest baseline, development priorities, real responsibilities, support and milestones.

T

Trust: A trust is a legal arrangement in which one party, the trustee, holds and manages assets for the benefit of others, the beneficiaries, under terms set by the person who created it.

V

Voting and non-voting shares: Voting and non-voting shares are classes of a company's shares that carry the same or similar economic rights but differ in whether the holder can vote on company decisions.

The handover will happen either way.

Request a private conversation