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The Fighting Side of Family Business

THE GLOBE AND MAIL – MANAGING – Thursday, October 14, 1999, B16

Two brothers who built a sizable electronics company are now suing one another. It would have been easy just to divide the company and avoid the acrimony. Instead, they are publicly accusing each other of poor judgment and deception.

Family members whose previous generations fought have a predisposition to fight themselves. That's because the message that stuck is that war is all right if you win. It's a difficult legacy to overcome.

As you might guess, the specific details are not what this dispute is about. This is really just the re-enactment of an old battle.

Their father and an uncle were once in business together. They fought – and subsequently didn't speak to each other for 20 years. The loud, proud legacy now continues with the sons, despite the painful memories of the old fight and cousins whom they couldn't visit socially.

This is a distressingly common phenomenon. Family members whose previous generations fought have a predisposition to fight themselves. That's because the message that stuck is that war is all right if you win.

It's a difficult legacy to overcome. Consider the logic. If winning is everything, the toll in destroyed relationships doesn't matter. This is such an entrenched attitude that both sides usually feel they have won – even when any objective observer would say they both lost time, money, family ties and peace of mind.

Make no mistake – the fighting legacy kills family businesses. Repeatedly, the same ultimately pointless arguments resurface: Who was smarter? Who did all the work? Who is entitled to take out how much money? Who "deserves" what? In one dispute, one brother even argued with another over how many children the second brother should have had in order to simplify estate planning.

Typically, no one remembers what started the fight. When they do, it's not the focus of anger. Instead, you'll hear about subsequent insults and slights. The fight has become the family's default mechanism for resolving problems.

It is extremely difficult to rewrite your destiny when the fighting "genes" assert themselves. There are really only two ways: divide the company or find common ground, either through mutually held business goals or by means of a "constitution" that governs the family in living and working together.

Divide the company. Splitting the firm into territories is an attempt to break the pattern of competition, comparison and awkward co-operation.

S.C. Johnson & Co. of Racine, Wis., makes Johnson Wax, Raid bug spray, Edge shaving gel and other major household brands. This year, current patriarch Samuel Curtis Johnson announced that he is dividing the fifth-generation, $5-billion (U.S.) family business into three parts, each run by one of his three children. A fourth child did not wish to run a business segment.

Why take this route? Mr. Johnson recalled a 10-year family battle that ensued when his grandfather died without a will. He didn't want it to happen again.

Common creed. If there are no common goals to act as beacons, people feel directionless and powerless. The usual human reaction to powerlessness is aggression. The result: everyone tends to take disputes personally.

A pair of feuding brothers re-ignited simmering resentments when their children joined the business. A battle broke out, and each family incurred more than a million dollars in legal fees. One side finally bought out the other.

Six years later, despite the best intentions, the family with the business is still on the verge of fighting. At the last minute they stop, get someone to mediate and, figuratively speaking, go to a neutral corner.

Finally, in recognition that winning a family war is a hollow victory, they are putting together a sibling "creed," a constitution to govern how they interact as partners, family members and shareholders.

For instance, each now runs a separate, profitable part of the business. The constitution stipulates no crossover – they can offer advice on one another's business, but each is independent. Only their activities as shareholders can affect one another, and despite different business styles and opinions, they are co-existing – for now.

Common goals. Another set of brothers who actually witnessed their father and uncle duking it out on the site of their business have found a different way to get along: a common goal.

But they realize the limits of this approach. They saw firsthand how fights destroyed their family and have found it difficult to rewrite the script for themselves.

Now that they have inherited the business, they have concluded a 15-year agreement to expand the business, then sell it. They will not pass on the business and ask their children to attempt once again to overcome the fighting legacy.

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