Family Business Magazine E-Newsletter
February 20, 2007




Contents
1.  Casino mogul returns to firm after death of his son.
2.  Loews' second-generation leaders emulate elders' strengths.
3.  How four sisters were groomed for success.
4.  Tips for avoiding succession blunders.
5.  Cultural differences can derail global partnerships.





1.  Casino mogul returns to firm after death of his son.  South African casino mogul Solomon Kerzner returned to the helm of Kerzner International Ltd. after his son, 42-year-old CEO Howard "Butch" Kerzner, was killed in a helicopter crash in October, the Wall Street Journal recently reported. "Most succession dramas involve the sudden death of a company patriarch, not the successor," the article noted. Before his son's death, Kerzner told the Journal, "the Kerzners were going to continue running things and there was no time frame for the family not to be involved. But I'm 71 and I won't be doing this for another 30 or 40 years." Butch Kerzner "had been carefully prepared for the job over many years," the Journal said. In December, the government of Singapore rejected Kerzner International's bid for a casino project, a development that industry observers see as a consequence of Butch's death, the report noted. (The day after his son's funeral, Solomon Kerzner flew to Singapore to demonstrate the company's continuing strength; shortly after returning to his home in London, he had triple-bypass heart surgery, the article said.) Kerzner's four other children are not expected to be considered as successors, according to the Journal.  (Source: Wall Street Journal, Feb. 13, 2007.)

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2.  Loews' second-generation leaders emulate elders' strengths.  The second generation of Tisches to lead Loews Corp. have more than tripled the company's stock in three years, raising the value of the family's 30% stake to more than $6 billion, according to a recent profile in Forbes. The second-generation leaders -- chief executive Jim and co-chairmen Andrew and Jonathan -- "have pulled this off by emulating [Jim and Andrew's father and Jonathan's uncle] Larry Tisch's strengths: picking undervalued properties, avoiding debt and caring more about cash accumulation than net income," the article said. "They also have avoided a repeat of the patriarch's biggest mistake, which was to bet on the market's direction." One challenge, according to the report, is that Loews' stock trades at a discount to the sum of its parts. "The Tisches do not control the company with any supervoting shares," Forbes reported.  (Source: Forbes, Feb. 26, 2007.)

See "Toolbox" in the Summer 2005 issue of Family Business Magazine for a review of Jonathan Tisch's book The Power of We.

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3.  How four sisters were groomed for success.  The Wall Street Journal's recent profile of the "Sullivan sisters" offers insights on grooming female children for leadership, though the sisters are not family business owners. Denise Sullivan Morrison is president of Campbell USA at Campbell Soup Co., Maggie Sullivan Wilderotter is chairman and CEO of Citizens Communications Co., Colleen Bastkowski is a regional vice president of sales at Expedia Inc.'s Expedia Corporate Travel, and Andrea Doelling is a former senior vice president of sales at AT&T Wireless. Their father, Dennis Sullivan, an AT&T executive, "imbued them with his intense work ethic and encouraged them to be independent and determined, and to cultivate big goals," the Journal reported. He and his wife, Connie Sullivan, taught their daughters to "aim high ... and if you don't get what you want, analyze what went wrong and try again." They also fostered collaboration among their daughters. "The teamwork their parents expected at home evolved into a support network, despite [the sisters'] competitiveness with each other at times," the article said.  (Source: Wall Street Journal, Feb. 12, 2007.)

For advice on training young women for family business roles, see "Raising your daughter, the next CEO" by Ellen Frankenberg in Family Business Magazine's Summer 1996 issue.

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4.  Tips for avoiding succession blunders.  "By and large, family companies pay too little attention to developing systematic methods of selecting successors that will minimize the biases and political intrigue that often surround the process," writes family business adviser Ivan Lansberg in The Family Business Succession Handbook. Many problems that lead to poor succession choices can be avoided by creating career-development plans for successor candidates, Lansberg notes. He offers the following additional suggestions to promote sound judgment in the last stages of the succession process:
  1. Think carefully about the organizational and strategic challenges facing your business in the future. Make a list of the attributes the new leader or leaders will need to cope effectively with those challenges.
  2. Develop multiple candidates so you do not limit your choices. Developing several candidates simultaneously builds a healthy degree of comparison into the process and helps you define the qualities the company will need most in the next generation.
  3. Track the performance of the candidates as they move through various positions in the company. Prepare a performance profile for each candidate and match it against a profile of the ideal candidate to determine each person's strengths and weaknesses.
  4. Consider doing an external CEO search, if you can afford it, to parallel the internal selection process. Interviews with outside executives will allow you to assess more clearly, by comparison, the capabilities of the internal candidates and to establish the market value of the skills you are looking for.
  5. Build checks and balances into the selection process. Consider involving your board. In addition, some companies set up a succession task force of family and non-family executives to oversee the ongoing collection of performance data on the candidates, monitor their progress and recommend additional training.



For more suggestions on achieving a smooth succession, see The Family Business Succession Handbook. Learn more about the book and view the table of contents here.

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5.  Cultural differences can derail global partnerships.  "U.S. family companies are particularly attractive acquisition targets for foreign investors or global private equity groups," notes financial adviser Francois de Visscher in the current issue of Family Business Magazine. "Family firms' long-term strategic orientation, close employee relationships and conservative financial structure alleviate some of the risk for foreign investors entering the U.S. market. This is great news for family companies seeking a foreign partner or buyer. But merger deals with foreign companies are much more complicated than transactions with American partners. The cultural fit between buyer and seller is as key to the long-term success of a merger as the financial considerations." Here are de Visscher's suggestions for assessing the cultural compatibility of a potential foreign partner:



For more information, see "Finding a cultural fit in global M&A" by Francois de Visscher in Family Business Magazine's Winter 2007 issue. Visit our website for subscription information.

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