Recruitment of an independent director for a family-owned business

Assignment

To find the first independent director from outside the family to join the exclusively family-based Board of Directors and prepare for the generational handover

Issues : Preparing for succession
Sectors : Consumer goods/Retail
Services : Board Services

Context

  • A family-owned group based in the south of France has a turnover of around €200 million, split equally between three business lines in the BtoB services area.
  • It is owned by the third generation of the family; the shareholders are first cousins. But the actual leaders are five brothers and sisters from the same branch of the family, who manage the holding company’s Board of Directors. They get on well. Two of them work in the group as operational managers; the others are successful within their fields.
  • The business needs to start preparing to hand over to the fourth generation; the cousins’ children. There are around 10 of them, including two who already work within the group. The first, aged 35, has ambitions to become CEO. The second, aged 30, is more interested by creating start-ups in other sectors which would be more fun and dynamic.
  • Considering the growth of the business and its upcoming succession, the members of the Board of Directors understand the need to become less insular. They are looking for an independent director to join the Board of Directors and help them meet this challenge. However if a director is identified by one of them, the others are bound to have doubts in terms of neutrality. They decide to call upon a consultancy firm specialising in executive recruitment.

Eurosearch & Associés involvement

  • Once contacted, E&A meets with the two family directors to reassure them that they are familiar with family-owned mid-cap businesses of their size and business area. This meeting enables them to draft an initial director profile.
  • Once hired, E&A meets with all the members of the Board of Directors as well as the General Manager of the holding company who is not a family member, to finalise the profile. This is then approved by the Board of Directors who also defines the director fees.
  • The director would be a former mid-cap company CEO who is familiar with the issues surrounding a family-owned business, either on a personal or professional level. Seeking to pass on his experience, he would have followed directorship training and a strong questioning attitude. He should be available and not reliant on this role for a living. He should be young enough to bridge the gap between the third and fourth generations.
  • E&A identifies candidates via its network and evaluates them against the twin challenges of professionalising the Board of Directors and supporting the handove
  • All the candidates are of high calibre. The decision will ultimately come down to their interpersonal skills and character, as integrating an outsider into a closely bonded Board of Directors is not easy.

Results

  • The director recruited is aged 55. He has himself handed over his family-owned business, substituting it for a family-owned holding company to support his children’s business creation projects.
  • He spends a lot of time meeting each member of the Board of Directors and each shareholder face-to-face. He visits the sites and familiarises himself with the various businesses, assisted by the General Manager of the holding company. Whilst there, he meets the members of the fourth generation who work within the group.
  • As part of his mediator role, he solves a long-standing residual conflict with a sleeping family shareholder. He helps to simplify the legal and patrimonial structure of the group.
  • He manages the group of fourth generation cousins, bringing them together and setting them to define the business plan, family charter and challenges for the future, as well as their rights and responsibilities.
  • On top of his interpersonal skills, the fact that he is neutral and has the group’s general interests at heart mean that he wins over the family’s trust. He is then able to professionalise the Board’s practices and support the takeover of the fourth generation.