We're Engaged!

WJM is the UK’s leading family business law firm. In this very topical article, Susan Hoyle looks at what a Christmas time engagement can mean to a family business. We pose some questions on ownership which, after the congratulatory toasts have been drunk and ring has been admired, all family businesses should ask themselves

By Susan Hoyle

A wedding is always good news and, somehow, a Christmas engagement is that bit more special.

But before mothers are let loose on wedding arrangements, should anything else be considered?

The answer, for a family business, is a resounding “Yes”. Marrying into a family business can present a big challenge – should someone who marries in become an owner of that business?

Some business families limit ownership to bloodline descendants of a founder, while others include spouses as owners. Arguments for and against can become heated and can cause ructions which last for generations.

One of the strongest arguments in favour of having spouses as owners is that they are the next generation’s parents. A excluded, resentful spouse will not pass on positive messages about the family business and the family’s place in that business, nor will he or she work to strengthen the “glue” which binds a family together in their business.

The ‘against’ arguments often centre on the reducing influence of the “founding family”; the dilution of wealth through spreading a limited pot further, and the spectre of divorce and its potential to destroy the family business.

Should a family business worry when an engagement is announced?

That depends on each family and their attitude to spouses. Open, engaged families know they can pre-plan for the worst through their shareholder agreements, pre & post-nuptial agreements and suitable insurance. Family business history is littered with those who married into a family business and were not only a parent of the next generation but also took over and grew ‘their’ family business after their own spouse died.

Embracing a Christmas engagement should be welcomed. Enjoy the champagne, admire the ring, stop the Mums from arranging absolutely everthing and make a note in your new diary to discuss where spouses fall into your family business structure.

WJM are Scotland’s leading family business and business family law firm, and widely recognised as the “go-to” experts when a business or its family want to address those issues peculiar to family businesses. Issues like how to work with your family and still enjoy the wedding.

Merry Christmas

Susan can be contacted through sjh@wjm.co.uk

Read more on WJM’s family business services here.