When I started doing research about conflicts in family business, my inbox overflowed with horror stories. The topics ranged from working for the ex-in-laws to wicked stepmothers taking over the company to whether to call your grandfather by his first name at the office (awkward). It seems that we all know someone who has been or is currently involved in a family business.
You’ve heard of the Los Angeles Lakers, right? What you may not know is that the owner of the team, Jerry Buss, passed away several years ago. His estate plan was put in place more than five years before his death, and his adult children were all aware of their dad’s intentions. In spite of the careful planning, a major feud recently erupted between three of his six children over control and management of the team. Their next court appearance is scheduled for May. Needless to say, this is a complicated situation and, as my friend @GuyDawson expressed, “Thanksgiving dinner is going to be interesting …”;
In a situation where an estate plan has been conscientiously made and presumably discussed with the family members affected, one would think that litigation will never happen and the family will live happily ever after. Not necessarily. And even the most iron clad estate plan may not ultimately turn out to be iron clad. People evolve, greed emerges, outside voices interfere and, years later bad feelings erupt. Who wins? The attorneys. Period.
The Laker organization is at one end of the spectrum. What if your family business isn’t quite that expansive? What if there’s only you and your two siblings taking over the restaurant after your father and mother retire? Who is responsible for making which decisions if your parents didn’t implement a plan? Whose personal expenses can be run through the business and whose cannot? Which sibling ends up storming out, never to speak to the others again?
When the antidote takes place at the beginning of the conflict, it has the greatest chance for success. I like to use the example of a rock hitting your windshield. At first, there’s only an annoying hole, usually right in the middle of your line of sight. If left alone, the glass surrounding the hole is likely to start cracking until ultimately, the entire windshield shatters. So it’s ideal that the family in conflict over the business begin to address the issues when the rock first hits the windshield. It might take a single meeting with a Mediator, but in my mind the absolute best scenario is to also have a business succession expert present at the meeting. In sort of a tag-team manner, each of the professionals is able to deal with his/her area of expertise so that the actual succession plan of the business is discussed along with the the underlying issues leading up to the dysfunction.
Two experts are often better than one — not only to help with the future profitability of your family business, but to help with the future compatibility of your Thanksgiving dinner.
It is one of the points to address at the beginning of a business. You must have an exit strategy. Then as the business progresses, it’s a great idea to re-address the exit strategy. Mediation is a great solution to address this issue before feelings get hurt.