Indian Wealth Management Forum 2019 - Exclusive Insights - Shweta Shah - 3
Head - Wealth Structuring & Tax
Edelweiss Private Wealth Management
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In India (or abroad), the basic characteristic of a family business, is that (the) families or the business owners are very passionate about the business, as compared to a non-family business, right? Because of this passion, they concentrate so much on growing the business that the things that which are not very urgent take a backseat. For example, planning for succession, it takes a backseat. The challenge is that the family business faces is that, when you talk about transitional, or when you talk about succession planning, it's a very emotional issue. It's very difficult for families to make a distinction between family and business because both are very distinct characteristics. Taking important decisions or taking tough decisions on things like, how much to give to who? Whether I should enroll my daughter in the business if she's more deserving. Whether my younger son will be a better candidate for taking the management compared to my elder son. All of these are very tough decisions. I think it becomes very difficult for an Indian business owner to (make these decisions). I think the first challenge is business - the distinction between business and family, as such. The second is managing (the) aspirations of different family members. The younger generation may not want to join the business, or there could be sibling rivalry, a generation gap, expectation mismatch. So, I think managing these aspirations of different family members is another challenge. The third one, I think, is since families are moving borders, they have assets overseas. There are a lot of complexities involved when you start thinking about planning for succession or transition, because you need to think about laws and regulations in every country where there is a presence of the family or the assets. So, I think to weave all of these together is a good challenge for the families.