Family Business Governance Consulting
Effective Corporate Governance
TD&A recommends that family businesses establish a governance process overseen by either a board of directors or a council of advisors responsible for supervising business operations management. Our family business governance consulting offers practical guidance and education regarding the board’s role, optimum board effectiveness, candidate recruitment, meeting procedures, and governance practices.
Why Is Effective Corporate Governance Important?
An established and effective corporate governance structure not only prevents potential scandal, fraud, and corporate liability; it has also been shown to increase confidence in stockholders and potential investors which in turn may produce profitable results for the organization. Some studies have shown that good governance is highly associated with better performance.
The Sarbanes-Oxley Act
The Sarbanes-Oxley Act, passed by congress in 2002, is legislation that more strictly defines the roles of professionals who provide legal, accounting and other services within the area of management and corporate governance. Although this legislation is meant for regulation of publicly traded companies, the policies set in place can be helpful for any organization to manage and govern itself. Click to see the articles “The Sarbanes-Oxley Act of 2002: Why it is Relevant to the Closely Held Family Business”; and “The Provisional Audit Committee”
Board Oversight and Audit
Too often businesses operate with inadequate or nonexistent internal and external financial audit operations. TD&A assists clients with implementing board level oversight of their financial management and controls.
Why is Board Oversight and Audit Important?
Established audit committees have shown to play a significant role in reduction of earnings management as well as prevent incidents of fraudulent activity. Members of the Board of Directors and/or Audit Committees should be independent from the family, an outside source who can provide objective assessments of the financial practices of the company. Click here to see article, “The Provisional Audit Committee”
Family Business Governance Structures
A formal governance structure such as a family assembly or family council allows the entire family to come together to discuss shared values, air differences, plan for the future, determine philanthropic goals, and more. TD&A creates the architecture for a governance structure and a "family constitution," which serves to establish the family's core values and commitments for future generations.
Why is a Family Governance Structure important?
Regular family meetings where family members can come together and voice their opinions or discuss issues within the family business in a structured way will lead to a more organized and strengthened family. Instead of conflicts being avoided and brushed under the surface, they will be confronted and dealt with. Additionally these family meetings will have an educational component. Exposure to any aspect of the business will positively affect children or the next generation. They will learn new skills, their interest may be heightened, and the family values and traditions will be inherited. Click here to see article, “Family Business Advisory Council: Purpose and Structure”