Succession Planning Critical for Family Businesses, Says Former BSE Chairman Sethurathnam Ravi

Sethurathnam Ravi BSE, ex-Chairman, Bombay Stock Exchange, says succession planning must be given importance over Indian family businesses. Here he opines that many family-owned businesses do not have proper transitional plans, which in many cases leads to conflicts and disturbance. While succession is paramount for the carrying on of the businesses, the factors that influence the business mainly comprise issues like family structure, aspiration of the members, control over wealth, etc.

Sethurathnam Ravi BSE

According to S Ravi BSE, the key is to discover and groom successors early. More, it is a match in skills, aspirations, and domain knowledge with leadership abilities. Family charters, councils, and formal succession planning also form important aspects of maintaining transparency and effective management of family wealth. Listed companies add layers of complexity with corporate governance and SEBI compliance.

Actually, Ravi finds that family businesses are prone to conflict but due to effective mediation mechanism and family arrangements, the conflict is minimized. Sometimes professional management also takes over to replace successors who are not ready; hence, tax planning, asset transfer, and governance structures form the necessary parts of transition, thus these families must plan well in advance to avoid any conflicts which may arise in their transition stage.

Sethurathnam Ravi concludes that planned succession is unavoidable if the family's legacy has to be maintained, thereby ensuring that the business thrives in the long run. Such actions from the family should, however be timely and strategically concerted on managing the succession.