Apollo CEO urges family businesses to plan for transition

Apollo Investment Limited Group CEO Ashok Shah. PHOTO | DIANA NGILA | NATION MEDIA GROUP. 

By JAMES KARIUKI
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Insurance businessman Ashok Shah has said planning for transition was the best way to safeguard multimillion investments in family-owned businesses.

Mr Shah, who heads the family owned Apollo Investments Limited, with insurance interests in Kenya, Uganda and Tanzania, said writing a will declaring the list of directors and their individual shareholding was the best way to ensure companies continue thriving when the founder dies.

Speaking at the second Association of Family Business Enterprises annual breakfast meeting held at Capital Club in Nairobi, Mr Shah said vision bearers “killed” their multi-million investments by failing to define succession.

He said this had immediately seen ownership squabbles explode in courtrooms after a vision bearer's death.

“The vision bearer could become incapacitated or pass on but where succession had been penned down in a legal document means the business must go on as it has leaders to take over,” he said.

Mr Shah said that family members actively involved in running the business should earn salaries and bonuses.

Non-active family members should earn dividends after a specific period of time, he said, thereby ensuring everyone is rewarded for their contribution.

Makini College Executive Director Joseph Okello called on directors of family businesses to consult other family owned businesses’ owners when handling conflicts.

He said court battles drained the businesses off cash while creating a major rift that was difficult to heal.

Mr Okello said the association was better placed to lobby for preferential terms on policy and taxes as compared to when an individual approached government officials.

Mr Shah added that success for family-owned businesses lay in legitimate practices where taxes were paid for promptly and graft was abhorred, in order to end secretive practices where some members of the family directly engaged various regulatory agencies.

JOIN ASSOCIATION

The meeting called for more members to join the association so as to enhance knowledge on handling conflict which they noted was the major causes for splits and final demise of businesses.

A recent PwC study on family-owned businesses in Kenya found out that only 30 per cent of businesses survived demise of the vision bearer.

A further 20 per cent collapsed after demise of the second generation as compared to European and American businesses that have existed for generations.

Members also raised issue on exclusion of women in allocation of business shares and operations while couple owned businesses also experienced downturns when conflict threatened to cripple operations.

Mr Ashok said that while he managed the day-to-day running of the business, his elder brother who founded the insurance firm was the biggest shareholder which helped create synergy in the business.

He said succession would only succeed where children were assisted to acquire the highest education possible before being slowly introduced to the business where they would initially be employed in the lower cadre with specific duties and not making decisions for the company.

Mr Shah took over the reins at Apollo from his brother, with his other siblings, also shareholders of the company remaining non-active.