Last week I received a call from “Juan” who told me his attorney had found the perfect buyer for his business. Juan had always said that selling the business would be his last resort. Juan is 78 and his wife would like him to retire. Juan took over his Dad’s business about thirty years ago with his sister. Juan’s skill as an entrepreneur plus endless hours and a bit of luck had created an enterprise with well over 1000 employees, social stature and wealth.
His sister became aggressive about 10 years after Dad died. She wanted more and more dividends and questioned his secretive way of doing business as well as his bookkeeping methods. This conflict ended with a fairly lengthy and costly lawsuit which Juan won. Juan has not spoken to his sister since that time.
Although he loves his children , he distrusts his older son’s business leadership. “Paul just doesn’t want to work that hard” Juan lamented. Not only that, I don’t think the managers respect him.” Juan added. Lately his son-in-law, the CFO, has been complaining vigorously to him about Paul. Juan’s children seem to be constantly fighting and although Juan mediates these conflicts, he has no faith in their ability to resolve conflicts on their own. Juan’s middle son, Gerry, quit the business years ago. Mary, the youngest, married Tom, whom Juan hired against the objections of both his sons. Tom is the CFO and has done quite a good job in Juan’s eyes.
Juan loves his grandchildren, two of whom (ironically, the children of Gerry) are already working in the company. Both of them have MBA’s and are quite serious about business and show good leadership.
The business has struggled the last three years. About 2 weeks ago, Tom made it quite clear that in his opinion the major bloks to growth in this company was Juan’s son, Paul. He gave several examples of key managers now refusing to speak to Paul. When Juan brought this to Paul’s attention, Paul refuted thiis. And Tom, obviously wants you to fire me.” Dad and Paul had a significant argument at this point. The relationship has been cold since then.
Juan is tired at the end of each day. He sees his family falling apart. Last Christmas, it was clear that kids did not really want to show up. They argued about the time of the meal, when each would arrive and what food each would bring. The in-laws seem not to get along. The business has been Juan’s life. It is the legacy given to him by his father.
Juan had already consulted his attorney, an investment banker, a financial and estate planner. Each had given him a lengthy nswer promoting the sale of the company for financial and estate reasons plus intricate details for tax savings. Although this is a correct business decision, Juan feels unable to find the “right” solution. No surprise – the answer lies not in financial or legal analysis! Rather the answer lies in understanding the needs of three systems and looking at their interrelationship.
The three systems of course are each Individual, the Family and the Business. Each system is in a growth stage and has emerging needs. For Juan to find the “answer” to his question he might begin by asking himself and his family the following:
What kind of family do we have now?
What kind of family do we want in the future?
What are our individual hopes and life plans?
What is the business’s short-term and long-term financial projection?
What kind of Leadership and Governance Structure facilitates the business’s growth and family harmony?
What kind of Ownership structure in the future best supports business growth, family harmony and individual goals?
How can the family not repeat the legacy brother against sister?
There are many more questions to be discussed in this family. The need is for Juan and each family member to use this moment in exploring deeply and honestly each person’s needs and desires. The underlying question is does the family have the trust and emotional strength to have this kind of dialogue? If not, Juan and the family and the business may disintegrate.
Marc@sii-inc.net