Can You Heal Betrayal?

Can You Heal Betrayal?

Children may not place the same value on a family business as their parents do, which can create huge conflicts at the time of succession.

Mike Wells (not his real name) wanted help putting together a succession plan for his family business.

From the start, Mike made it quite clear that Terry, his son and oldest adult child, was not suited for working in or leading the business. He lacked a business orientation, he couldn’t manage money and his interpersonal skills were lacking. Of his two daughters, Michelle and Kathryn, Mike thought the older one, Michelle, had leadership potential. She was working successfully in a large public company on the West Coast. Kathryn was a stay-at-home mom married to a stockbroker and had no interest in the business.

Early in the interview process, Mike talked about how he came into the business his father had started. Mike had a professional position in a business on the East Coast when his dad recruited him. Initially his father’s advisors didn’t think Mike was cut out for the company. He sported a long ponytail and did not have strong business acumen. But his father saw that he was an eager and interested learner, and Mike grew into an excellent business leader. Eventually he bought out his dad, and the transition from father to son went smoothly. There were no concerns to address beyond routine father-son relationship issues and the usual discomfort of the owner-entrepreneur letting go of the business.

While Mike led and grew the business, he nearly tripled its value over the years. He took pride in the company, its success and its future. He looked forward to continuing that legacy through the succession plan when he recruited Michelle to join the business. She was a sharp, strong-willed business professional and brought many innovative ideas for business growth.

But from the start, Mike and his daughter had conflicts. He respected her ideas but realized their disagreements were harming their family relationship. To minimize conflicts, he had Michelle report to his general manager. Michelle was upset about this arrangement. Conflict escalated between Mike and Michelle, so he returned to working directly with her. Yet little in the workplace dynamic changed.

What the father viewed as Michelle’s obstinate nature wore on their ability to have a harmonious work relationship. Their clashes began to negatively impact the business as well as their father-daughter bond. After several years, Mike realized that to alleviate the tension between them, he would sell his business to her. He could retire and it would resolve the professional conflict with his daughter.

At the same time, Mike had concerns about his other two adult children. Terry was having problems in his marriage because of financial issues. Kathryn had conflicts in her marriage because her husband was verbally and physically abusive. Mike was also worried about his grandchildren. While Mike was transferring the business to one daughter to smooth their conflicts, he thought the other two adult children were in marital crises.

There was a need to address deep personal issues confronting the family. Here is the approach we took to helping Mike and his family members:

The succession plan supported Mike’s desire to sell the business to Michelle and allow her to lead the company’s management. Business advisors created a financial exit strategy for Mike. Michelle borrowed money to purchase the company. This move provided a clear demarcation in what became intense negotiations and strained feelings. The professional transfer gave weight and value to the business and continued the family’s legacy in the company. It focused on cold, hard facts to reduce hot emotions.

When Michelle gained control of the company, she upended management practices and took the company on what Mike thought was a risky growth plan. But he was fully aware that it was now her company and he’d been reasonably compensated. The succession plan had worked.

But he found that there were other family issues that needed attention. We advised a professional resource to help Terry create financial stability, pay off bills and operate within a budget. This turned the corner for Terry and his family and made his relationship with his father much better.

We also helped Kathryn find support for her husband to change his behavior. This included a marriage and family counselor who stabilized their relationship and strengthened their marriage. The situation is not perfect, but Kathryn is a happier person. She and her husband continue to work on their relationship with support from the therapist.

In the ensuing years, the succession plan dramatically supported affinity in the family. Then a final turn of events occurred in the business.

After just one year of owning and running the business, Michelle sold the company—for substantially more than what she had paid Mike for the business. He had treasured it as a legacy; she had sold it as a smart business move. He felt betrayed.

Five years have since passed and the succession plan is a distant memory. But its purpose not only established the ground rules, it also in many ways accommodated the unexpected. Mike has forgiven Michelle for selling the family business. And what makes it easier is that they are still a family. Members get together to celebrate family holidays, enjoy themselves across the generations and strengthen their relationships. tcbmag

Tom Hubler (tomh@thehublergroup.com) is president of Hubler for Business Families, a family business consulting firm.


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