Splitting family businesses has worked well in India for groups that have scale. However, staying together appears to be the trend for the smaller business family groups.

Kavil Ramachandran, Professor of Family Business and Wealth Management at Indian School of Business said on Tuesday that family businesses were going through changes on multiple fronts.

On the sidelines of an Indian Chamber of Commerce-organised event, Ramchandran said that in terms of not only handling inheritances and redistribution of business assets, but also with respect to managing growth amid changing business risk perceptions, adoption of professionalism and technology, family-owned business houses were attempting to transform. Examples of a family-run businesses building a strong group of independent directors as a part of strategy are now an Indian reality, he told Business Line .

There is a realisation that a split cannot be the omnibus solution for business interests. There is a discernable trend among some promoters in “institutionalising” the corporate entity and its management practices. First generation entrepreneurs, particularly in services, were generally free of the zamindari culture.

However, he noted that some of the so-called “professionally managed” public companies and groups show traits and idiosyncrasies typical of a family-owned business.

“The long-term impact of these on companies could be serious in terms of leadership, direction and sustainability,” Ramachandran felt.

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