With The Traitors once again dominating conversations, viewers are watching friendships, alliances and trust being put to the test.
While most businesses will never experience quite the same level of intrigue or drama, the programme highlights a reality familiar to many business owners: even the strongest relationships can be affected by changing circumstances, differing priorities and new opportunities.
Trust gets businesses started
Businesses founded by family members, friends or long-standing colleagues are often built on trust and a shared vision for the future. When everyone is aligned and focused on the mission, it can be easy to overlook questions such as:
- What happens if someone wants to leave?
- How key decisions will be made
- How a dispute would be resolved
At the outset, the focus is usually on getting the business off the ground and pursuing growth opportunities. As a business develops, shareholders may naturally find their priorities diverging and alliances changing (will everyone stay faithful?). One shareholder may wish to expand rapidly, while another may prioritise stability or dividend income. Family circumstances, retirement plans or succession discussions can also create tension in what was once an entirely aligned relationship.
The most successful businesses are often those that recognise that change is inevitable and put appropriate safeguards in place from the outset to help navigate it.
Why governance matters
Governance is not about anticipating failure. Rather, it is about providing a framework that supports the business, establishes clear rules and manages expectations from the outset. Robust articles of association and a well drafted shareholders' agreement can provide clarity on key issues such as:
- Decision making
- Voting rights
- Restrictions on share transfers
- Deadlock situations
- Dispute resolution procedures
By addressing these matters in advance, businesses can reduce uncertainty, support effective decision making and help preserve the relationships that often sit at the heart of successful enterprises.
We frequently advise businesses that have evolved significantly since they were first established. Shareholder groups may have expanded, family members may have become involved in the business (dare we say recruited) and future plans may have changed. Yet it is not uncommon for governance arrangements and constitutional documents to remain largely unchanged.
Reviewing those arrangements periodically can help ensure they continue to reflect the evolving needs and objectives of the business as it grows and develops.
What happens if someone wants out?
Whilst banishments and murders may not be, changes in ownership are a natural part of any business journey. Shareholders may retire, pursue new opportunities, wish to transfer shares to the next generation or simply become less involved in the day-to-day operation of the company. All of these changes can raise important questions about ownership and control, specifically what should happen to the shares of the departing shareholder.
In our experience, the most effective arrangements are those agreed before they are needed. Common considerations include:
- Who can acquire the shares
- How those shares should be valued
- Whether existing shareholders should have a right of first refusal
- How a buyout might be facilitated
Where disagreements do arise, having clear procedures in place can help prevent them from escalating into costly and time-consuming shareholder disputes. These issues can often be addressed through carefully drafted provisions covering matters such as pre-emption rights, compulsory transfer provisions, valuation mechanisms and buyout arrangements.
The best time to agree these provisions is before they are needed, when discussions can take place constructively (possibly, but not necessarily, whilst sitting at a Round Table) and without the pressure of a specific dispute or departure.
The real lesson from The Traitors
As any viewer of The Traitors knows, success is not determined solely by trust, strong relationships or shared goals. Ultimately, the contestants who navigate the game most effectively are those who understand the rules and know how to respond when circumstances change.
The same can be said in business. Whilst trust remains essential, it is rarely enough on its own to support a business through growth, succession and changing priorities. Good governance provides the framework that helps businesses adapt whilst also seeking to keep relationships strong and decision making effective.
At Lindsays, we regularly work with SMEs and family businesses as they navigate growth, succession planning and ownership changes, helping to ensure that their governance arrangements continue to support the needs of both the business and its shareholders.
By taking the time to agree clear processes before challenges arise, businesses can help ensure that changing priorities lead to productive conversations rather than a real-life Round Table banishment. No hooded cloak required.
