But it would take a carefully thought out plan to make that transition free of any nasty squabbles that could arise because of differing expectations and even dissimilar perspectives on the running of the business.
Often the concept of working together can start out with enthusiasm but it’s important to identify that the children actually want to be involved. Sometimes the concept of working with family is driven by the ambition of the parent rather than the adult child. If that child isn’t entirely keen to join the family business, resentment can grow.
It is because they are related that the families tend not to think the situation through and do the one thing that could prevent any disagreements later on – to document what each person’s role will be in the business, what each person’s expectations are and possibly what exit strategy should be in place should the parent later decide to leave the business and hand over the baton.
That's not to say such a business is destined to fail should younger family members be recruited. After all, when such structures are set up properly, they work well. But when it is not, tensions inevitably rise.
Offspring are from a different generation and their expectations will be different. So, too, could their perspective of business and they may bring with them a different set of skills.
They may see their parents as not being as progressive as they would like and have a different outlook on where the business should be headed.
While these are all potential conflicts that can arise in any business structure, emotions are exacerbated when the workers are related.
To avoid any of these pitfalls, it is important to decide in advance exactly what each party wants to achieve, what their roles should be and have an exit strategy in the event it doesn’t work out.
There is no doubt these are difficult conversations to have and for that reason, families tend not to have them.
In the circumstance of a parent wanting to recruit an adult child into the family business, there will exist a long history of the parent being in a position of control and the child may find themselves in an awkward position when the time comes that they may want to spread their wings.
The best tip? Seek advice before you start from a professional who can help prompt you to consider all the aspects of the family business that would need to be workshopped from the onset.
And that advice is best sought from a lawyer rather than an accountant. The latter is best placed to help you structure the business but a lawyer can offer an extra level of advice.
While there is no legal requirement to document the way forward between family members and the family business, a document like a ‘Heads of agreement’ which can be drawn up by a lawyer, can help avoid any misunderstandings later on about what was agreed to originally.
Justin Dowd is a family law specialist at Watts McCray.
