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How to Make the Best of an Accidental Partnership®

THE GLOBE AND MAIL – MANAGING – Thursday, October 15, 1998, B12

Edward turned down a chance to work for his family's thriving firm, and prospered with another company after graduation from university.

Eventually, however, he relented to his mother's repeated requests and rejoined the family enterprise as president. Despite their problems-certain family members' alcoholism and ownership questions, for instance he believed that he could help them.

Making the partnership a happy accident and not a tragic one is really a matter of recognizing it for what it is.

Before long, Edward fell into the grip of old family grievances. His three siblings told him he had abandoned them, only to return believing he was better than them. His calculating older sister was making end runs around others in her department. All the siblings wanted dividends, whether the business could afford it or not.

This is the world of the accidental partnership, the bizarre phenomenon of the family business, where partners are thrown together by circumstance and a common gene pool, not by choice.

Along with the reluctant partners come the unspoken rules and subliminal messages that characterize society's most basic social unit, the family. Dominance, acquiescence, resentment, pride, anger and dozens of other human emotions seem to be transmitted and received almost telepathically.

But in the accidental partnership, their intensity is multiplied. One cannot leave without breaking the partnership, the business and, perhaps, betraying the family.

Many accidental partnerships learn ways to co-exist, value differences and flourish into the next generation. The key is not to create any illusions about the structure. It's preordained, often tax driven, passed on with little or no choice and then expected to function as if it were a working group of peers who sought out, trusted and respected each other.

Making the partnership a happy accident and not a tragic one is really a matter of recognizing it for what it is. Your family connection got you in, and you now must find ways to develop a different relationship, a relationship that is accepting, trusting and dignified.

How do you do things differently? Step one is to develop a partnership creed. Set up monthly confidential meetings that focus on the family relationships.

These meetings are not about how business is going lately they're about what people do, and what they want to do. Most family partners say, "We meet all the time," but, when probed, admit they deal with business issues and seldom address the relationship.

Try to break down barriers.

Don't go to one partner's house, find private and neutral ground, perhaps renting a room at a private club or hotel. And don't share the discussions with others - even a spouse - until agreement is reached. Set the dates ahead of time and make them sacrosanct.

What's up for discussion? Everything that affects power and progress for the people in the partnership. It's not just about decision making. Within families, there are plenty of buttons waiting to be pushed. Are there dynastic intentions or do the partners want to sell? Who can be a partner and own stock? Does the family head want to work until death? Does birth order matter? What are the dividend and compensation policies?

Sometimes, even the most combative families can make peace and limit conflict. With their father still active in the firm, five children in one family firm realized they were barely tolerating one another. The business was lucrative and they didn't want to kill the golden goose, but there was little hope of resolving their poisonous feelings for one another.

They decided to set down rules that they would follow in the interests of preserving the business for their own children to one day run it in harmony. Their first move was to challenge the family rule of participation.

After almost two years of discussion about what would be best for the family, the business and the partnership, they agreed to value competency first, instead of lineage. Working in the firm is now a privilege, not a birthright. They set clear rules for entry, staying in and exiting the firm.

Today, discussions are open to such an extent that some children - members of the third generation - have introduced the idea that they may not participate in the business. Now, the debate revolves around how they might sell their interests and to whom, a far easier discussion than one with overtones of betrayal of the family heritage.

While the partnership creed can be a lifesaver, it's important to treat it as a living organism. Don't believe that just because you have made a decision, that's the way everything will work. Stick with it for a while and see how it works. Arrangements may change and evolve, and navigating the relationships could take years.

The accidental partnership is an arranged marriage, and therefore takes a special effort to understand and make it operate smoothly. Almost any relationship can be changed by those willing to put real energy into making it better. Most people know this, but few choose to act on the knowledge.

ALL ARTICLES © PERVIN FAMILY BUSINESS ADVISORS INC.

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