Sell Your Business Your Way : Excerpts

Chapter 4: Take Care of Your Other Children
Family is Family, Business is Business

We are grateful to Mark Brenner and David Pellegrini of The Global Consulting Partnership for sharing their insights on family dynamics and their methodology for assessing and addressing the family issues that can have a tremendous impact on the value of the business and the process of a sale – either internal or external.

John Sampson had a problem. The scrappy, hard-driving entrepreneur had built a successful chain of retail stores in a very competitive industry. At first, he had felt fortunate that two of his sons had followed him into the business. But now, in his 70s, he didn’t feel he could turn it over to either of them. It wasn’t because they didn’t have the skills. Both sons, in their late 40s, were highly competent. The one, vice president of operations, was on the floor and knew the operations and 1,000 employees of the business inside and out. The other, vice president of administration, was sharp as a razor and knew the inner workings of the company’s finances, strategy and real estate holdings. On paper, it looked like a match made in heaven, but the reality was the sons were barely talking about the business. When they did speak, they were at each other’s throats. It would be like turning the business over to Cain and Able.

As the owner reached retirement age, the strong morale in the organization began to weaken. Employees were nervous about the future. Several of the key employees said if this succession issue could not be resolved successfully and soon, they would leave the business. There were positions that were not filled and the company’s growth strategy was stalled because the two sons could not cooperate. Worse yet, if this situation continued and the business were put up for sale, it would have been a fire sale. Each son stated emphatically that he would leave the business if the other was named CEO.  John Sampson had built a very successful business, but this family crisis could undermine everything he had worked so hard for. As much as he wanted to continue the family legacy, he felt that he had to go to an outsider to run the company.  After a professional search, he placed a general manager over the two warring sons, with a hope that this new structure would help stabilize the organization and allow him to retire. Perhaps this outsider could even encourage the sons to develop the leadership skills needed to break their impasse.

A Family Legacy

Sampson’s business had always been in the family since it was founded by his immigrant parents during the Great Depression. Sampson’s father had lost his job. His mother set up a small shop in her garage to make ends meet.  The store grew after the end of the Depression and her husband eventually joined the retail store. The company was passed down to two sons and two daughters, but John Sampson and his brother bought out their sisters. When his brother died, Sampson took over the business.  He aggressively expanded the chain of stores and revenues, building it into a regional enterprise with more than $150 million in revenues. But the black-and-white photos of Sampson’s parents still hang in the corporate offices. His mother is in her apron and his father behind the cash register. He had expected that the same photo would hang in the offices of his sons, but now he was not so sure.

Sampson hoped the new GM might serve as a “nanny” who could bring to two sons along. It wasn’t a perfect solution, but the best they could do. When the GM developed health problems that caused him to step down, the father went back to the search firm to hire another general manager.  The search firm executive, who had known Sampson for many years, suggested they take a closer look at the situation. Instead of throwing another outside executive at the problem, he suggested that Sampson examine the family and organizational dynamics more carefully.

That’s where Mark Brenner, chairman of The Global Consulting Partnership, and his colleague David Pellegrini came in. They conducted extensive interviews across the organization, including managers, the owner, his sons, and, just as importantly, their spouses (who are the real “CEOs,” the Chief Emotional Officers). Brenner and Pellegrini reached an unexpected conclusion: There was a possibility to work out the relationship issues and allow the two sons to take over leadership of the business. “Sometimes it may look bleak,” said Pellegrini. “But when you have the firepower, the business skills, in the family you can often make it work. You just need to get a handle on the emotional issues.”

The results of the interviews were summarized in a 60-70 page report, laying out the challenges of the relationship between the sons, the impact on the business and the potential for improvement. “Everyone could see how destructive the relationship between the two sons was,” said Brenner. “It was taking a material toll on the business.” In an emotional, daylong meeting, the owner and his two sons met with the consultants in a hotel room to discuss the results. One of the turning points was a particular question that Brenner and Pellegrini had asked each son during separate interviews. To each son, the consultants asked: Would you want to go it alone? In answering this question, both sons realized that they had complementary abilities and that neither one would want to continue to run the business without the other. With this new appreciation, they began to visualize a way to work with each other. “It was a seminal moment,” Brenner said. “They realized they needed to form a rational business partnership. It just happened to be between two brothers.”

Both brothers, while very competent in their areas, needed to build the emotional intelligence to be successful leaders. They engaged in an ongoing period of executive coaching individually as well as coaching sessions together. When Brenner and Pellegrini met with them a year later, the difference was profound. “The year before, there had been a cold chill in the room,” Pellegrini said. “They didn’t acknowledge one another. You could cut it with a knife. When we met with them a year later, we marveled at how they did with one another.  There was much less stress in the room and it was a real business meeting."