... all of the complex issues that can arise when family members are involved in the running of the business. As well as dealing with the business needs in terms of audit, tax compliance and other services traditionally associated with business and financial advisers, we have been working with business owners for many years and recognize the unique challenges they face.

PRIMA, an acronym for People and Relationship Issues in ManAgement, was developed by Grant Thornton in South Africa and was adopted on a worldwide basis.

Because of the major involvement of our organization with family businesses it became apparent that problems were not always of a commercial nature but frequently stemmed from relationships within the business. Owner-managed businesses employ half the world's workforce and generate more than half the world's GDP. Yet their needs, problems and prospects are often ignored by other consulting firms.

PRIMA can help prevent conflict or can be used to resolve issues after they emerge. The founder of Grant Thornton Kessel Feinstein's Family Business Consulting division in South Africa comments:

"If there is one fundamental lesson that I have learned it is not to delay. More often than not, problems arise from the unwillingness of the members of the family to confront the issues in the hope that time will take care of them. Unfortunately this is seldom the case."

Our specially trained consultants are able to provide you with a valuable insight into the crucial relationship issues surrounding business management, and the financial and commercial options that are available to help resolve internal conflict. Our consultants have been trained to deal with such issues as making the transition from one generation to the next and how to plan for this change; the importance of setting up clear structures of ownership and responsibility in the business; the need to ensure that the business has the right financial structure to meet its projected targets; and how best to deal with the aspirations of the individuals who own and manage the business.

Sometimes, family relationships can make it difficult to deal with these issues and as a result minor issues can escalate into damaging disputes. These can in turn have serious consequences for the family relationships as well as the family business. By identifying the overlaps and potential conflicts between family, ownership and management goals, we can help to find solutions which are tailored to meet your overall needs and circumstances.

Our PRIMA service also demonstrates how careful planning can help avoid problems in the future, which often happens in instances where businesses neglect to deal with the people issues in the management of the family business, and PRIMA can also provide you with practical and effective long-term solutions to address any issues that you are faced with.

Our PRIMA Service Methodology

The methodology for carrying out a PRIMA assignment is based on the Grant Thornton partner considering, but not necessarily addressing, all of the following twelve factors. The twelve factors, known as the Conceptual Framework, provides a checklist on the issues facing a business where there are relationship problems or where the owner-manager/partners believe there are potential relationship issues to be addressed.

Conceptual Framework - Addressing the issues facing family businesses

The purpose of the framework is to enable problems to be seen from different perspectives and to ensure that they are not tackled in isolation. Our "holistic" approach is unique in the way that it looks at;

• the needs of the business;
• the family and
• the individuals who own and manage it as a whole.
  

It is a feature of owner-managers that they believe their problems are unique. They are not, and that is why the conceptual framework has been developed. It has already been used with success on numerous international assignments.

A brief description of the Conceptual Framework follows:

Succession Planning
Preparing for passing control to others is important to ensure that the business does well in the future.

Remuneration Planning
Conflicts can arise when decisions are made about remuneration of key personnel whether they are family or non-family members.

Equity Ownership by Family Members
Establishing a clearly defined ownership structure, as well as a policy for the transfer, acquisition and disposal of shares is essential to owner-managers.

Family Members not involved in the Business
The family needs to consider interaction with members not involved in the business. In particular, hostilities can surface if shares are bestowed on family members outside the business.

Introducing and Rewarding Non-Family Executives
A family must in some cases be willing to accept an outsider's role in running the business. Such non-family members must be motivated through appropriate reward mechanisms.

Retirement and Estate Planning
This is a continuing process and must be done to plan in advance for retirement and for the transfer of assets to the next generation.

Bringing Family Members into the Business
Family members involved in the business should be introduced to an appropriate role, having gained experience of outside employment, and with a career development plan for the future.

Strategic Planning
Every business needs to decide what its objectives are and how to achieve them

Financial Structure
Owner-managed businesses need to meet liquidity requirements in addition to funding capital investments and providing returns to family and non-family shareholders.

Preserving Wealth
Family members need to develop an asset base that is not dependent on the business fortunes.

Resolving Conflicts
Families need to develop conflict resolution procedures which may be facilitated by a shareholder's agreement. Often the best results are attained with an external consultant.

The Family Creed
Family businesses need to develop a doctrine that spells out the family's core values and principles: what does the family stand for? Significantly, PRIMA does not consider any of these areas in isolation but as a 'whole'. By understanding how factors interact, Grant Thornton can recommend the best approach for you and your business.

Our PRIMA International Research Report helps us to better understand the issues affecting family businesses

The PRIMA International Research Report compares the attitudes, needs, concerns and hopes of owner-managers worldwide.

"This research program sponsored by Grant Thornton in sixteen countries world-wide, including USA and Japan, gives a better understanding to our firm of the real concerns with which we can assist owner-entrepreneurs," explains Brendan Lane, PRIMA Co-ordinator. "It provides valuable insights into the views of owner managers and family businesses and of the issues which are of particular interest to them. The day-to-day demands of running a business require enormous amounts of energy, drive and resourcefulness. Added to this for the family business are the broader issues of growth, family and non-family involvement, retirement, succession and the realization of wealth. This report firmly highlights these issues."

To view a summary of the International Research Report.

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