Prioritizing People Over Profits: The Role of Trust in Business Succession Planning

Episode Description:

In this episode, host Elizabeth Ledoux is joined by Caio Campello, a member of The Transition Strategists team. As an attorney, arbitrator, mediator, negotiator, strategist, and business transition guide (yes, Caio wears all of these hats!), Caio has worked with families and businesses to resolve disputes and find equitable solutions that benefit all parties. Tap or click the play button below to listen to: Prioritizing People Over Profits: The Role of Trust in Business Succession Planning.

In this episode, Elizabeth and Caio discuss the challenges and opportunities related to the succession planning process, the importance of a trusted advisor in facilitating communication between the owner and successor in a family business transition, and the shift in mindset for business owners transitioning to a new generation of leaders, from taking full control to trusting the process and building trust in the successor.

Thanks to Caio Campello for being on the show. Check with Caio on LinkedIn:

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Prioritizing People Over Profits: The Role of Trust in Business Succession Planning Transcript

Caio Campello: And of course, when we are talking about family business, there are issues related to powers related to money, lack of it, or eventually an abundance of money and power. So I think that family offices or in family business are not necessarily aware of the need to discuss this before it triggers to litigation or arbitration. So I think there is a kind of creating awareness and building building awareness between the family members to prevent this kind of dispute.

Elizabeth Ledoux: Welcome to the business transition roadmap. My name is Elizabeth Ledoux. And through my years, I have seen how communities thrive. When business succession and transition are done. Well, me and my team at the transition strategists have been helping business owners develop and implement transition strategies for over 30 years. And on this show, we want to help you by giving you the roadmap to a healthy business transition. Let’s get started. Hi, everybody, and welcome back to our business transition roadmap. I am just thrilled today to just have Kayo Capello with us on our podcast, little background on him, he is a lawyer. And he reached out to me via LinkedIn many, probably a couple of years ago now almost about a year and a half or two years ago, and started to investigate some of the work that we do some of the work on transitioning, and just how how we are able to put people first bring people through transitions, and hopefully mitigate some conflicts and some other things that might happen in the future. So he and I had some great conversations. And through that time, he ended up moving from Portugal back to Brazil. So he’s in Brazil now with his family. And he, thankfully, on my side is bringing our work to Brazil through his new practice there. And so Kyle, I would like to welcome you to this podcast. And I’m just so thrilled to have you here. So thank you.

Caio Campello: Thank you, Elizabeth, for the invitation. It’s a pleasure to be here today. And I hope that we have a good conversation. And I’m very thrilled as well to be joining this podcast with I really enjoyed following up all your podcasts is and i It’s a real pleasure to be here. Real life together with you. Thank you for that.

Elizabeth Ledoux: You bet. You bet. So Kyle, how about I would love I told a tiny bit of your story. But tell our listeners and audience a little bit about you your background. And let’s start there.

Caio Campello: Yeah, sure. It’s a pleasure. So I’m a Brazilian lawyer. I’ve been doing litigation arbitration for 27 years now. And more recently, I made a career shift to become an independent arbitrator, mediator and settlement facilitator. And, of course, now I had the chance to work with Elisabet TTS. My focus now is prevention of these periods. I really enjoyed the topic, because after 27 years in litigation, I think my mission now is trying to avoid conflicts. And of course, this expands your family business as well, because I am pretty much sure that major problems that arise in family business related to this conflict between the family members. Yeah.

Elizabeth Ledoux: Yeah, definitely. And so let’s talk a little bit about maybe some of the conflict and some of the issues that you have seen in the past. And then we’ll talk a little bit about the mitigation of them, because you’ve got some background in history in that, what kinds of things do you see that happen? That might be sometimes foreseen, right? You think that they might happen? And they do, but also sometimes unintended? And you just end up there?

Caio Campello: Yeah, sure. Yeah, there are many reasons that trigger a conflict. And of course, when we’re talking about family business, there are issues related to powers related to money, lack of it, or eventually an abundance of money and power. So I think that family offices or in family business are not necessarily The aware of the need to discuss this before it triggers to litigation or arbitration. So I think there is a kind of creating awareness and building building awareness between the family members to prevent this kind of disputes. And one thing that they can eventually consider is having distresses advisors to be seated in the family counselor, for example, which is a neutral person, independent and impartial, that can help then handling with this kind of conflict. Maybe there are some issues that the men, the family members, they do not have the tools or the willingness to handle alone. So I think this neutral third party would be a good idea for for them to help preventing this kind of conflict. I think lack of communication is a key issue. I think that maybe the family owners, they do not communicate in a clear way. And eventually this kind of blocked communication within the family members are one of the reasons, lack of planning. Of course, maybe there are some family members that they are not necessarily organized. And I eventually not planning the next steps. And of course, all of a sudden, they have a problem in front of them. And they do not know how to handle that. So I’d say that lack of communication, lack of planning, and eventually lack of money and power, maybe are the key issues that may trigger a conflict between the family members.

Elizabeth Ledoux: Right. And, and, you know, well, you and I have had some conversations prior to this, of just the idea of who is in charge, really, of the planning and the communication and leading that. And we’ve had those conversations, when you think about that, and you think about, like who is responsible for that, because many times the owner or founder or person of wealth, if you will, many times they’re sort of waiting for the successor to show up and communicate, right, and to kind of lead or push them out there waiting for that engagement. When that person that successor doesn’t show up. And I think sometimes the successors waiting for the opposite. So there’s sometimes some big confusion in there. So who is who really leads this process?

Caio Campello: Yeah, again, I do believe and I think I’m a strong believer that the this trusted adviser, this outside counsel, or outside adviser would be the best person to make a bridge between the owner and the successor. Because sometimes, as you mentioned, there is a kind of a block between them in terms of who takes the first step in terms of, yeah, I want this, I want that. And maybe the Father is waiting for the sun to say something and the son is waiting for the father to say something. And and I think that whenever there is a third party, during this bridge between them, it’s going to ease the communication, what they are feeling what they are, they are, they are afraid of their interest, their dreams. So in the end there is there’s going to be a person or eventually a company that is just like a safe harbor, I think, I think the honor and generation shoe they are going to communicate better when there is a safe place. And I think the safe place could be viewed by this dress of advisor. And because I think this communication is going to flow more naturally and easily. And I don’t know, maybe you can break the ice between the two and manage the expectations between them.

Elizabeth Ledoux: Yes. And so. So as a person walks through this, the idea of the trusted advisor, you know, we think of ourselves as guides. And we think of the transition as a journey. And so the concept of having somebody, a guide, potentially, who can keep everybody together, guide them along the way help them see each other’s perspectives, because you’ve seen it before. You know, kind of you’ve been down this road when maybe some of the people haven’t. And just that concept of being able to do that I agree with you that it’s nice to have somebody who’s impartial, who doesn’t have a hidden agenda. under, and who has really no skin in that game, right, just there to make sure that everybody’s doing well. And then the other thing that comes to mind Kayo is the idea that, you know, I was just talking to a family earlier today. I’ve been talking to quite a few families actually lately. It’s been interesting. I was talking to one earlier today, where you can see that they have some issues brewing, right. They’ve got a couple of three kids. And you can see that they have maybe some issues brewing. But they’re in their own thinking there. Okay. So when I saw a potential issue coming in, I brought it up to them. And they were like, oh, you know, we didn’t see that. We didn’t see that. And right now, they’re good family, really little or no conflict inside of the family. But when you can’t see, you don’t know what’s coming. Because sometimes they think you’re blind to it, since you’re there, and you think everything’s fine.

Caio Campello: Yeah, and I think one of the main targets of a guide is to give a new perspective from the outside, because this is the way that you can see things because if you’re involved in the situation, I think it’s more I would say, harder for you to understand what is going on. So this neutral guide that’s going to guide the family members. The key issue is to keep this impartiality in this independence, so that they can see things that the family is not seeing, because they are very, very, I’d say involved in the situation in the matter in the discussion. Yeah, you’re right.

Elizabeth Ledoux: Yeah. Yeah, it brings back a reminder was a story about true story. But I had two cousins that we were working with, and one cousin I was on with them on a Zoom meeting during COVID. And, and I said, he goes, he goes, I am so furious. He goes, I can’t believe my cousin, you know, thinks of me this way, and basically downgraded me to his level. And I was like, taken aback. I was like, Oh, my gosh, really. And so I just walked them through a couple steps. And I said, I said, so is your cousin, younger or older? He said, younger? And I said, has your cousin always looked up to you? And he said, Yes. And I said, So when he said, I’m almost I’m almost like you I’m almost to your status or your stage. Do you think he was dragging you down to his stage? Or do you think he was honoring you in yours and trying to reach your stage? And it was a complete flip of, you know, just an outside person looking in of complete flip of like, oh, he actually loves me, he actually respects me. And he’s actually trying to be me. Wow, that’s an honor. Right. And so, but it was so interesting in that time, it’s literally is about the perspective that a person has and how they see it. Yeah. Yeah. So as you bring this work into Brazil, right, which is a, I think, a wonderful thing that you’re doing. What are some of the things that you’re hoping to do there? And to how are you hoping to help Brazil and Brazil families?

Caio Campello: Yeah, it’s it’s good question. And I am very happy to be involved in this project. Being a TTS guide is something that is very, I would say, it’s, it’s something that the Brazilian market needs, there are fewer and fewer people doing that in this in this market. And I think that us has a huge opportunity to explore its works with the family business here in Brazil, and there are some reasons for that. I would say that 80% of the corporations here in Brazil, they are family business. So there is a vast opportunity to introduce this succession and transition planning for these companies and and I feel like being kind of social responsible to help them doing that and to survive and thrive. And to make sure the next generation generation through generation three, it is kind of resume needs these companies to survive because the economy depends on them. People depends on them as being employees. So they are very, very important for our society for our economy. So I think it’s a huge opportunity and a huge responsibility for me as a TTS guy to help them going through the next generations, in a professional way. I do not see the family businesses here in Brazil, being held in a in a professional way. Meaning that they are not necessarily been advised by professionals like DTS, to help them go through the next generation. And of course, if I can do that, and can help them, it’s going to be a dream coming true. Because again, I’m helping the country as a whole. And being someone that can bring some light to some issues that the family members they are not seeing, and eventually can be a turning point for them to survive for the next and next generations. So again, it’s a pleasure in that mix of a huge responsibility to do that here in Brazil.

Elizabeth Ledoux: Yeah, and you know, that I have always loved, I’ve always loved your mission going into Brazil and your, you know, your vision of building that there. And, you know, creating that practice there for yourself, and then, you know, that mirrors so well with my mission, which is to do the same. Because when the businesses go into the next hands, well, the communities continue. And that’s really the goal is to have people living great lives and doing great things and enjoying great relationships, and all of that. And I do think, going back to the beginning of our conversation, that it boils down really to, I think, being clear about what you want, which is planning, right having a strategy. And then it also boils down to being able to communicate, and then revisiting and executing it well over a period of time. Yeah.

Caio Campello: Yeah, yeah. And I think the Brazilian companies, they have a very unique profile, which is they do business in a very, I’d say informal way, and not planned. And not necessarily organized. And I think this, this work that ETS has, we will bring this light to them in terms of being more organized, being more professionalized and issues on allies and given some guides, and rules in light, so then to to make them thrive and survive. So whenever there is, there is a, say, a science behind that it’s going to be very helpful for the Brazilian competence, because I think we usually do business year as as a learning process that we are learning through the process, and not necessarily in our planning, and our planning, right. So I think TTS has a huge role to play here in that in that specific perspective,

Elizabeth Ledoux: which is amazing. And awesome. And it Yeah, it’s exciting. It’s exciting to see that similar things are happening in other countries, and similar needs are taking place there. So so when you look back in your experience, with, you know, dealing with family, businesses, family offices. When you look, what do you think has worked very well for them that they have done? And then what would be what do you think has been maybe something that was missing? or confusing, or something that they haven’t done? Didn’t work? Well?

Caio Campello: Yeah, I think lack of planning and lack of commitment and commitment that the next generation, I think there is a short sighted perspective here from the business owners that they are not necessarily looking to the future, they are looking on each of the present. And when they look to the present, they fail to to plan and organize themselves. And I think this is the I wouldn’t say the major mistake, so to speak. I think they trust that everything’s going to be fine, but again, they just there is a blind spot in terms of being more organized and planned. So and, and commitment to, to the business not only to the business itself, but also to the people working with them because if for example they they are not looking to people and I think TGS has a very good mantra people first and I think all all companies should have this mantra. One of the mistakes is not looking to the people who are working with you. So, I would say that whenever there is a possibility for Are the honor to understand the their the needs and interests of their employees, the interests and needs of their heirs. And the family members, I think this is going to be a major shift in the future of the company, because they are just simply looking for money and financial issues and KPIs and so on. And sometimes I think they just fail to look to the, to the people around and this could be a major mistake.

Elizabeth Ledoux: Yeah, and that that commitment, you know, has to happen on both sides on the on the person who’s transitioning great, the owner, founder, wealth person, and it also has to happen on the successors side. And, you know, what do you think about owners being in a position where they’ve taken care of the employees for so long, they’ve taken care of the family, they’ve made the decisions for the, quote, unquote, children? Right, they’ve they’ve led this for 2030 years, maybe, I don’t know, could be longer? And what do you think about them having to shift their thinking and, and actually not take care of people in the same way they have, which means it’s not that the people aren’t cared for, but the decisions shift? Right. And, and it’s almost an engagement of, of a of them and their successors doing the plan together, versus the owner doing it. And then again, quote, unquote, taking care of all the choices and decisions, what do you think about that shift in behavior?

Caio Campello: Yeah, it’s a major shift in the mindset, because I think the honor, he’s, he’s or, or she is used to take all the decisions, take the lead, and do everything. And, and somehow, whenever there is a transition, and a succession, this is going to be a different picture, because he’s no longer been there. And, and for him to leave the company in a more peaceful way, I think the key issue is to trust the successor and trust the process of succession, and trust the people who are now taking over the business. So I think it’s a matter of building trust between the people around building trust in the process, as you mentioned, and the name of your book, it’s, it’s a journey. And of course, it is a journey, it’s going to be very important for the owner to trust the process in terms of, okay, this is going to be fine, everybody, everyone is going to be taken care of my new successor is going to is prepared, which is very important. And, and of course, I think there are some situations that the owner could eventually consider not just losing sight and eventually just leaving the company, he can eventually consider a transition process that he can join the decision making process together if the successor for a while until eventually the successor is ready enough to to go along. And I think when that happens, the owner has a feeling of still being part of this, and eventually been useful. So it’s good for him as well, because he’s not taking the day to day decision. But I think he may be be in a position to contribute and to share his experience and knowledge for strategic issues. That eventually the successor is not used to do that.

Elizabeth Ledoux: Now, which is a it’s a huge opportunity for the person transitioning especially if it’s family, huge opportunity for the person transitioning to enjoy, you know, passing on some wisdom, knowledge, that kind of thing, but not being engaged in the day to day, which is a good thing. And also a great for the successor because they’re able to have the opportunity to take all of that in and you get to it’s not the easiest road transitioning to what we call internally right, not going to a third party that you don’t know. But transitioning and helping somebody else that you do know get into the role of leader and ultimately owner of the company. Yeah, that’s a it’s not the easiest road but it can be one of the most rewarding roads. Yeah. Pretty interesting. Well, guys Wash our time went really quickly kayo. And I am, again, thrilled to have you here. I want to I always ask one last question at the end of the podcasts, and one of the things that I would like to know from you is what one piece of wisdom are one thing would you leave with our audience that you would like for them to take away from this that you think would be most helpful to them?

Caio Campello: Communicate, I think it’s the key. And communication is not only key for the transition for the planning, but I think also communication is key for preventing disputes. So I would encourage all the family members to keep communicating in a very clear and frequent way. So that the issues they do not be stuck and do not discuss. And eventually, if there is any important thing that you have to share, and to communicate, do that as soon as you can, and avoid that. It’s going to be a snowball, and eventually you cannot just avoid the worst, which is the I don’t know the bankrupt of the company. And so

Elizabeth Ledoux: yeah, the the the bankruptcy of the company can happen, which hurts the family and then also the Yeah, the loss of relationships, loss of the family. Yeah. So yeah, so ending on an up note, I love the idea of communication, and to keep open communication and continue to do that with some clarity. And I, I also appreciated your point about having a third party guide. Then again, it could be somebody you know, somebody like our firm that does consulting, but it also can be a trusted adviser that you’ve worked with for many years, just being open to listening to what is going on around. So those are two great things that you brought to us today. So anyway, Kyle, thank you so much. Hi, go ahead. Thank

Caio Campello: you for having me. It’s a pleasure and an honor to be here. And I hope that every everything that we discussed here today, resonate with the people who are listening and watching. Thank you. Very

Elizabeth Ledoux:  good. Thank you. Thank you for listening to this episode of the business transition roadmap. If you are listening to this and you find yourself wanting to go deeper into these topics and start the process of putting together your transition strategy. I’d love to offer you a free initial strategy session with my team, where we’ll help you to explore the future transition of your business, head over to www dot transition To schedule a call. Thank you again for listening, and I’ll see you on the next episode of the business transition roadmap.


The Business Transition Roadmap with Elizabeth Ledoux

How do communities thrive? When businesses experience healthy growth and transition. Join CEO of The Transition Strategists, Elizabeth Ledoux as she and her guests identify what makes a successful business transition roadmap. If you know you want to transition or exit your business “one day”, today is the right day to start planning. This show will give you the roadmap.

If you’ve enjoyed this podcast, you can check out other episodes here: Podcasts – The Transition Strategists
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