As a business begins to pass to the next generation three common themes tend to develop:

• “too many” children in the next generation (also known as a great talent pool!)
• a divergence in objectives from those of the founder – eg “this company will never have debt”
• new skills required as the business grows

A written agreement or family constitution may help to address these issues. Before that is drafted, here are an initial ten questions for the family to consider:

1. What are the main reasons to continue, rather than sell?
2. What education, skills and outside business experience should a family member have before becoming a director of the company, shareholder or trustee of a family trust?
3. Do family members not working in the business rely on dividends or seek external employment?
4. What future family conflicts may arise?
5. Should the business always be wholly owned and run by the family or will it benefit from external hires?
6. What core business and family values need to be maintained?
7. What should happen if a family member wants to sell their shares?
8. What criteria should be in place to remove a family member as director or shareholder?
9. At what age should family members retire as a director of the company or trustee of the family trust?
10. Will dividends and pension be enough to support the lifestyle of the retiring members?