Succession: Planning

Failing to Plan is Planning to Fail

Failing to Plan is Planning to Fail: Key Considerations for a Successful Family Business Transition

Family business dynamics can be tremendously complex. There can be a wide range of opinions among family members regarding their contributions toward the business and what the future should look like once the current owner is no longer involved.

Business planning with family members raises many intensely challenging questions, including:

  • What is the best way to reward the efforts of family members who have dedicated years of service to the business?
  • How should you “fairly” provide for those who have moved away and are uninvolved in the business?
  • Does the “heir apparent” even want to continue with the family business?
  • If the business is jointly held by siblings, what is the likelihood of success for co-ownership in the next generation?
  • Is now the right time to approach family members on a potential buy-out? Or is it better to seek a strategic buyer or outside third-party?

While the questions above may be difficult to answer, business owners should not let family dynamics or complexities prevent the successful implementation of transition plans. Family-owned businesses must decide what a successful business transition looks like and then proactively plan to accomplish those goals.

A True Success Story: The Power of Family Business Estate Planning

While it is very difficult to please every family member, partnering with estate planning professionals and other advisors can help to facilitate timely implementation of business succession and transition plans. Significant and purposeful results can be achieved with appropriately executed planning techniques. One such example is an Eide Bailly client named Jack (name and details have been changed to protect privacy).

Jack was first introduced to Eide Bailly planning professionals in 2014 when he was 86 years old. Like many family business owners, Jack did not have any estate planning or business succession plans in place. His total net worth of $40 million included an S-corporation appreciating in value and farmland in several states. Jack’s goal was to leave the S-corporation stock (valued at $21 million) to his son to operate the business and distribute his remaining assets to his other children.

Eide Bailly’s teams advised and recommended a grantor retained annuity trust (GRAT) strategy for Jack. GRATs can be an extremely effective and efficient estate planning tool allowing growth and appreciation to pass to beneficiaries free of estate or gift taxes. With a GRAT, a grantor (creator of a trust) transfers assets to an irrevocable trust. The grantor may create a series of short-term GRATs, with annuity payments rolling into subsequent GRATs with the returns in excess of the Section 7520 rate being received by the trusts for the benefit of beneficiaries.  

By 2022, Jack had transferred 59% of the S-corporation to his son using no gift or estate tax exemption. This tremendous result allowed Jack to transfer significant wealth to his son, leaving Jack with gift tax exemption to make gifts to his remaining children.

To further advance his planning, in 2021, Jack transferred farmland and ranch properties to a limited liability limited partnership (LLLP). Eide Bailly’s Business Valuation team assisted with valuation of corporate stock and partnership interests. A Financial Services professional also evaluated Jack’s financial position to assess his cash flow and anticipate future expenses to ensure Jack maintained his standard of living throughout his lifetime.

Through collaborative planning among wealth transition, business valuation, and financial planning, Jack was able to transfer $34.4 million of wealth to his family with the use of only $9 million of his estate tax exemption.  

Establishing a Key Person to Continue Your Legacy

To effectively transfer the family business, it is also important for business owners to mature and empower certain key persons who are critical for business transition. This individual typically possesses the necessary acumen, judgement, and knowledge that is vital to the success of the business. They are also able to implement the operational and organizational aspects of the business and harness the vision, skills, and capability to follow through on business decisions. Your key person should be ready, willing, and able to run the business should you suddenly not be able to.

Let’s return to our real-world example with Jack to illustrate the importance of developing key persons and refining key person planning when the unexpected arises. Following Jack’s transition of the business to his son, Kyle, it was time for Kyle to carefully consider how he was going to continue his family’s legacy and who his key person would be in the event of Kyle’s absence or death. Remember – continual family business planning always needs to be considered.

Through much deliberation and consideration, Kyle selected his son, Jacob, as the key person to continue the family business. However, after two years of developing and building Jacob as the next leader, Jacob decided that the family business was not for him.

What now? Fortunately, Kyle was able to consult with members of the Eide Bailly Business Valuation team who used a strategic interview and management survey process to determine who was best suited as the key person. Kyle successfully redeployed his revised strategy with this new individual. This allowed Kyle the ability to focus on the success of the business and skill development for the new key person.

Step Confidently Towards the Future of Your Family Business

Family business owners are far more likely to achieve a successful business transition when they have strategized a plan that considers their personal goals, involves appropriate family members, and cultivates a thoroughly prepared key person. In addition, coordination between various professionals (tax, legal, accounting, financial, insurance, business valuation and others) are critical to achieve success in the transfer of your family business.


How to Create a Next Gen Wealth Education Plan

Most families struggle when it comes to planning wealth education for the next generation. Often, learning initiatives start informally and don’t get real traction because  there is no formal learning program in place. Initially, parents conduct wealth education in fits and starts. Perhaps the family brings in a consultant or speaker, attends a conference, or the CFO provides an annual review of the company’s financial statements. After the event, interest is high and the next gen is excited, but time passes, momentum is lost, and interest in wealth education wanes.

Knowing when, where, and how to build a framework for intentional wealth education is key to keeping next gen wealth education on track. Follow these steps to create a wealth education plan for your family that will inspire the next gen to become extraordinary stewards of wealth.

Start with Clear Purpose and Direction

The first step of developing a wealth education plan is to define a clear purpose and direction. Just as a mission and vision statement pull a business towards a unified goal, having a clear vision, purpose, and desired outcome for education
initiatives will help align next gens to the importance of wealth education. Simon Sinek, speaker, and author of “Start with Why” wrote, “Achievement happens when we pursue and attain what we want. Success comes when we are in clear pursuit
of Why we want it.”

The “why” drives the education plan through purpose and intent. Anyone planning wealth education should ask, why is education important to where the family is at this time? Furthermore, why should family members prioritize the education that is presented to them? Knowing the why is fundamental to lasting and meaningful education for next gens. Education for the sake of education and checking boxes isn’t likely to win hearts or minds and get the intended result of engaged and competent stakeholders. However, demonstrating how wealth education is an integral piece of their personal development, goals, and ultimately, defining what’s in it for them, drives adoption and engagement.

Determine Motivators and Cater to Competing Priorities

The second step when planning wealth education for your family is to understand competing priorities and the “WIIFM Principle.” WIIFM or “what’s in it for me,” gets to the heart of motivation and engagement. A next gen’s time is a finite resource as they build their career and life both in and out of the family enterprise – thus, the asks of their involvement and engagement should be valuable to them and impactful to the family system.

Identifying the WIIFM for the next generation will be unique to each family, its values, and priorities. Some families use wealth education to build relationships between branches or large shareholder groups, some use education mandates for board participation, while others use successful completion of wealth education programs as a benchmark for family council eligibility. These extrinsic motivators can be a carrot and stick when it comes to initially engaging the next generation, but they lose their impact over time. While prepared and competent stakeholders are important to the family enterprise, this intangible vision is not guaranteed to incentivize the next generation. Instead, to encourage genuine buy-in and lasting engagement, focus on intrinsic motivators to answer the WIIFM question. Perhaps wealth education is an overarching family goal, but individuals set the meaning and importance for their own participation. Consider that each family member is truly different from the next, and some may have different goals depending on their learning capacity, direction, interest, and engagement. Pairing a family purpose while allowing next gens to define their own meaning and success will encourage adoption at the individual level.

Select Effective Administration

The third step is to determine how and by whom wealth education will be administered, or the educational strategy. Ask the fundamental questions regarding “who, what, where, when, and how.” Who are we educating? Where will they learn? Is learning in-person, with a mentor or virtually better suited to family’s schedules? Determine the cadence (monthly, quarterly, etc.), method (in-person, remote, asynchronous), and clearly define success (complete coursework, pass an exam, etc.). Determining the educational strategy sets the stage for the family to focus on learning and keeps momentum moving forward.

Prioritize Learning Areas

Finally, focus on outlining and prioritizing learning objectives. Are there topics that need to be urgently addressed to accomplish ownership or governance related issues? Use urgent items as a starting place for the wealth education plan and to inform the overall curriculum. To aid curriculum prioritization, survey the next generation to see what topics most interest them, and how topics help them to meet their personal goals. From there, plan education and mentoring around those key areas.

Alternatively, provide a pre-selected list of education topics for next gens to explore. After establishing a list of important topics and objectives, create a learning schedule and review it periodically to ensure it is still aligned with the family’s goals. While not every detail needs to be in place, having a clear framework will keep the wealth education plan moving forward.

Planning and executing wealth education for the rising generation can be a monumental task but starting with the purpose and vision can guide the process. Wealth education is a wonderful opportunity to bring the family together and unite around shared vision and values, drive engagement, and move the family enterprise forward.

To get started with your family’s wealth education plan, take our learning assessment here and unlock access to the Personal Education Plan workbook.

Kirby Rosplock, PhD. is the Chief Learning Officer and Founder of Tamarind Learning. Torri Hawley, MS, is the Client Education Manager at Tamarind Learning.



HBO's 'Succession' isn't just great TV

Scene: In a gilded townhome several floors above New York’s Fifth Avenue, a family toasts its patriarch’s 80th birthday. Rather than bask in the warmth of his family’s love and respect, the patriarch makes an announcement: He intends to remain CEO of his family-controlled media conglomerate for another five or 10 years. The patriarch has made this decision even though he himself — and a Forbes magazine cover story — anointed his second-eldest son as CEO-in-waiting.

Love and respect turn to anger, confusion — and eventual betrayal — as the leader of both family and business suffers a stroke and all manner of multibillion-dollar hijinks rip the corporation from its moorings.

This is a scene from the first episode of Succession, the HBO TV series now in production for a third season. Though the show is fiction, this scene recalls an announcement in 2014 by Sumner Redstone, the 90-year-old CEO of Viacom (now ViacomCBS), that he wasn’t going to die, much less retire. Rupert Murdoch, the 89-year-old executive chairman of News Corporation, also springs to mind.

This scenario is all too real and plays out far too often in family-owned enterprises large and small. Succession does a great — not to mention entertaining — job of highlighting two especially critical components of corporate governance: effective communication and independent boards. All family business owners seeking continuity and growth should watch the show with an eye toward protecting their enterprise from the disasters depicted on the screen.

The characters (…and there are some real characters!)
The family dynamics in Succession are both intriguing and relatable. In almost 35 years of advising family business owners, I have encountered many of the characters’ personality traits first-hand. For context, let’s take a quick look at Succession’s primary players:

Logan Roy is the goateed patriarch and founder of media and entertainment conglomerate Waystar Royco. Crass and humorless, Logan never pulls punches — which he delivers quite often. His only real love is the company he has built.

Logan has four children, two of whom play prominently in the succession discussion: Kendall Roy, Logan’s second-
eldest son, who displays the business skills to run the empire but is plagued by massive self-doubt and recurring drug use; and Siobhan “Shiv” Roy, the youngest Roy, whose nickname describes her persona — cutting, cold and loyal to no one.

Other prominent players include Gerri Kellman, Waystar Royco’s general counsel, who knows which of the company’s closets hide skeletons; and Shiv’s neurotic husband, Tom Wambsgans, new head of the company’s cruise ship subsidiary.

Succession plans and communication
Scene: Seated at the head of a long, formal dining table at his opulent oceanside estate in the Hamptons, Logan Roy initiates a lunchtime discussion among his heirs about a potential outside takeover bid for the company. The bid is forcing Logan to discuss succession. The atmosphere is heavy with tension and distrust as the heirs mordantly express their reluctance to reveal their thoughts in front of their father and each other. Lunch concluded, Logan retreats to his den, where he meets with each heir individually.

We’re privy to only one of the discussions in its entirety, in which Logan appears to offer the CEO position to his daughter, Shiv. She is entirely unqualified but falls in love with the idea and eagerly accepts. Meanwhile, her siblings are left in the dark. And so are we … were promises made to anyone else?

Whether it's a fictional Logan Roy or a real-life Sumner Redstone, succession is often the can that gets kicked down the road.

People naturally hesitate to talk about succession because it means addressing unpleasant subjects, including incapacitation and death. The topic triggers sensitive questions about who is most qualified, who is most deserving and “what’s fair.” These discussions often become emotional and spark resentment, splitting family members into factions resembling a competition in which — to borrow from CBS’s Survivor — someone is inevitably voted off the island.

A solution to this dilemma is to: (1) craft a succession plan with full participation from the board of directors, and (2) communicate that succession plan early and often to all key stakeholders — the senior management and appropriate family members.

Succession planning is a critical directive for a business if it is to endure for the benefit of all family members, regardless of their involvement in it. As such, a viable plan places the needs of the entity — not family members — first.

Succession planning is a process, involving more than simply the drafting of a document or flow chart. The process should define the desired outcome, steps to get there and how those steps will be achieved. A proper planning process contemplates management as well as ownership succession and considers any necessary changes to the company’s capitalization.

The process begins with a CEO job description, which many family-owned businesses fail to develop. After all, the founder or owner is often synonymous with the company. Still, companies and markets are dynamic, and certain definable qualities must be identified. The job description should outline the experience, skills, authority, behaviors and temperament the person in that role is required to have, regardless of its current occupant. Cultural fit is critical. 
Additional management succession plan components include, but are not limited to:

• A likely time frame for succession — planned retirement age and transition period.
• Transition responsibilities for both outgoing and incoming leaders.
• Evaluation of potential internal candidates, including heirs and non-family senior managers.
• Training and integration requirements, and plans for high-potential candidates.
• Processes and objectives for developing next-level-down managers, as well as family members in subsequent ­generations.

The plan should be formally reviewed and updated annually as a board meeting agenda item. The review ensures that the plan is on track and that communication — both formal (board meeting minutes) and informal (discussions with board members, management and heirs) — is taking place on a no-surprises basis. Unlike the Roy family, everyone should know where they stand, why and  (if appropriate) what they need to do to succeed.

An uncomfortable truth is that family members may not possess some of the critical experience and qualities the job requires. This is not to say that management cannot eventually continue in the family. In some very successful cases, I have seen a non-family CEO  groom the heir apparent. 

It’s hard for a powerful and seemingly infallible founder to envision his demise. But this inevitability must be addressed because carrying the CEO out of the building horizontally is not a viable plan. Indeed, it’s not an overstatement to say that a board’s most important function is succession planning.

Corporate governance
Scene 1: In front of an orange, waning sun on the rooftop of Waystar Royco’s lower Manhattan offices, Gerri informs Kendall, who has been appointed interim CEO in the wake of his father’s stroke, that the company has quietly amassed billions of dollars in debt. Gerri says the company will soon be unable to service the debt without a substantial capital infusion.

Shortly thereafter, Kendall agrees to a 30% venture capital investment to solve the financial crisis. After he awakens from his coma Logan mercilessly curses his son.

Scene 2: Waystar Royco is publicly accused of covering up multiple acts of sexual misconduct by former employees in its cruise ship subsidiary. Shiv’s husband, Tom, responds by directing his assistant, Cousin Greg (who is not as scatterbrained as he appears) to destroy all documentation related to the issue. Greg signs out the documents from the company archives and destroys them in a Thanksgiving Day shred-fest.

For those of us who work regularly with family businesses, Succession is a mind-boggling assortment of abhorrent business practices. The sheer number of governance missteps is part of what gives the show its satirical appeal.
Because governance is so important to every company, it’s interesting to see that in real life, much like at Waystar Royco, so few companies have truly independent boards. Even when they do, the board is often absent when it comes to addressing business-critical issues because such discussions often draw fire from the founder.

How is it possible that a company could amass such enormous debt unbeknownst to most executives, family stakeholders and board members? How could the board not be engaged when a company is subject to high-profile sexual abuse accusations and lawsuits, its reputation in peril?

It’s indeed possible in the absence of an independent board, or if the CEO has populated the board with country club buddies and “yes men.” This, again, is where Succession mimics real life. I see it far too often. CEOs need people to tell them the hard truths, without fear for their jobs or disruption of family harmony for doing so.

So why do so many CEOs of privately held companies resist installing independent boards? I’ve found they fear it will lead to a loss of control. Yet, good CEOs thrive on being challenged; it pushes them to improve.

I often tell CEOs that while a board is a management resource, board members are not responsible for answering management’s questions. Instead, to operate at maximum effectiveness, board members should question many of management’s answers. CEOs who resist challenging input are waving a large red flag.

The outsized influence of family and passive shareholders
Families typically grow faster than companies. This truism gives rise to many issues. For one, passive shareholders of more mature companies often become accustomed to fat dividend checks. When family members active in managing the company choose to grow the business and divert earnings to reinvestment, enormous friction often spills over into the family dynamic. 

The non-management shareholder is often blind to the pressing needs for investment. At the same time, active shareholders don’t want to be forced into borrowing or equity dilution to fund growth opportunities. Having liquidity mechanisms in place for inactive shareholders who want out can be helpful when such conflicts arise.

It’s hard for one family member to tell another “no.” Strong, independent directors can help blunt the effect of personal interests that weigh heavily — sometimes catastrophically — on family-owned businesses.

With two successful seasons “in the can,” as they say in Hollywood, Logan Roy is unlikely to heed my advice, populate his board with independent directors and develop a succession plan. After all, sound business practices rarely make for good TV.

But your story can be different. Rather than distract from your work, these practices will strengthen your business and facilitate a smoother transition when the time comes — and it will.

If you need more convincing, tune in to Season 3 of Succession. If nothing else, you’ll be highly entertained — and you’ll get some good tips on how not to run a family business.    

Brad Bulkley is the president and founder of Dallas-based Bulkley Capital, which helps middle- market business owners and management teams nationwide sell their companies, make acquisitions and raise capital ( He has more than 20 years of experience as an independent director of middle-market and family-owned companies and is a Board Leadership Fellow of the National Association of Corporate Directors.

Photos: HBO/Kobal/Shutterstock.

Succession planning is the key to family enterprise resilience

When a family business fails, most people suspect that estate taxes or incompetent advisers led to its demise, but that’s rarely the case. Even before the estate tax exemption increased at the end of 2017, it was rare to find a family who couldn’t keep their business afloat because they needed to pay estate taxes. There were even fewer instances in which poor professional advice led to failed family enterprises.

Leading a family-owned business has never been more challenging. When a breakdown occurs, it’s usually due to the failure to build a solid succession plan that incorporates governance, communication and a clear vision for legacy preservation.

COVID-19 magnified the importance of succession planning. Now more than ever, it’s crucial for family enterprise leaders to ask:

• What if something happens to the CEO?
• Is the next generation ready to step in?• Do we agree on vision and legacy?
• How will we fund the business and care for shareholders?

Without answers to these questions and more, any form of disruption could put the family enterprise at risk of becoming another statistic. Companies with a well-crafted plan, on the other hand, tend to be resilient in times like these. They are able to weather day-to-day challenges and hardships without sacrificing their future.

Overcoming the odds
Well before the pandemic, family businesses found it difficult to endure. EY Family Enterprise statistics show that more than 65% of owners say they want to transition their companies to the next generation, but fewer than 25% succeed in doing so. The obstacles are many, according to a study by The Williams Group. They include:

• Breakdowns in trust and communication within the family.
• Inadequately prepared heirs.
• Lack of a family purpose that defines how to use wealth.

Transferring leadership from one generation to the next is complex, and many companies are slow to act. Leading family businesses, however, are just the opposite. In a 2015 EY report entitled Preparing or procrastinating? How the world’s largest family businesses undertake successful successions, 88% of respondents from some of the world’s largest family enterprises said they had clearly identified who was responsible for the succession process.

Those businesses have a clear vision and process for leadership transitions, which makes them more likely to overcome adversity and foster long-term stewardship.

Getting started and getting it done right
Research by EY Family Enterprise Services on upper-middle-market family-owned businesses — defined as companies with $100 million to $3 billion in revenues — shows that a transition wave is on the horizon. More than 75% will change hands over the next 10 years. The pandemic reinforced the need to prepare sooner rather than later. Planning must go beyond creating short-term contingencies should something happen to the current CEO. Preparation begins with:

• Clearly defining who is responsible for the succession process.
• Developing a system that’s ongoing and consistent.
• Establishing a planning process to react to market disruption.
• Building a team to support execution.

Succession planning offers an opportunity to address the now, explore what comes next and imagine the beyond. It encompasses family and business considerations, and it is built around leadership, ownership, legacy and values, and wealth transition. To start the process, it’s helpful to consider questions that are aligned with these four dimensions:

Leadership: Have you identified who should lead the business going forward? Are you willing to transfer control?
Ownership: Who will own the business after the leader retires? Should ownership be limited to those who are involved with the company?
Legacy and values: What are the family’s values? Is the family confident the next generation will uphold those values?
Wealth transition: Are there plans for how to share wealth among family members? How will the owner(s) remain financially secure after transferring the business?

Family considerations vs. business considerations
The business supports the family, and putting measures in place to safeguard continuity amid economic uncertainty is paramount. But family considerations, such as financial security, governance and next-generation and family changes, must be prioritized.

Family considerations. Financial security includes analyzing accounts for long-term annuity, life insurance and legacy-related goals, along with objectives that will impact active and inactive heirs. It involves calculations to determine whether the senior generation will have enough to live on once the business changes hands.

Governance involves determining not just who will run the business, but also how to uphold the legacy that the founders had in mind when they started the business. That mission is an essential North Star and provides focus in times of uncertainty.

Legacy also influences how the next generation will be brought into the business for an orderly transition. Now is the time to make sure documents are in place that spell out the desired owner succession, governance and control preferences and share them with key family members or business stakeholders. These steps will prevent surprises and minimize disputes.

Business considerations. For consistency, establish controls and clearly define and communicate roles, duties and responsibilities. A family office can delineate between business operations and family affairs. To protect the business itself, take a broad view. An unexpected occurrence like a pandemic or natural disaster is always a risk, but security and competitive risks can also have an impact, as can evolving regulations.

Liquidity is another potential risk, because it’s often a source of tension when shareholder needs conflict with the need for capital to fund the business. The pandemic and ensuing economic turmoil touched off a race to secure liquidity to keep businesses going and workers employed. As the dust settles, continue to identify liquidity mechanisms within the context of your objectives and priorities.

Finally, family businesses should look beyond their present state to find ways to enhance performance. There will always be bouts of economic uncertainty. Business owners should benchmark their companies against others in their industry of comparable size or complexity to identify opportunities for improvements or cost reductions.

Expecting the unexpected
A strong succession plan is one that sets the business and the family on a productive course for the long term. It offers a roadmap for handling and moving past roadblocks to emerge resilient.

We have yet to see the full impact that COVID-19 will have on family businesses, but it should influence how they prepare for the future. That includes anticipating potential disruptive events and plotting them on their roadmap. The economic recovery pre­sents a chance to test and retest to make sure leadership and governance systems can withstand the unexpected. 

Robert “Bobby” Stover Jr. is Americas family office leader at EY US.

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact    


A son's push for planning

In many family businesses, it’s the younger generation that’s eager to charge ahead and the elders who rein them in. At Summer Classics, a Pelham, Ala.-based manufacturer and retailer of luxury outdoor furniture, those roles are reversed. Founder and CEO William Bew White III, known as Bew, is the risk-taker. His son William Bew White IV, known as William, is more cautious.

Bew, 69, says he has an MBA in mistakes — “possibly much more educational than an MBA from Harvard, and a lot more expensive.” 

“Dad and I are somewhat different,” says William, 44, the company president. “He’s go-go-go, multitask, always moving, always doing, and I’m more like, ‘Hang on, let’s think about this. I want to know all the facts before we move forward.’ He wants to race to the finish line, and I’m more reserved.”

When Bew offered his son the president’s job in 2016, William said he would accept only if the company took steps to build up its organizational structure. And when it came time to engineer a transfer of ownership to his generation, it was William who sought out a consulting firm to help with the transition plan.

Good instincts pay off
Bew’s great-grandfather Braxton Bragg Comer, a former governor of Alabama and United States senator, founded Avondale Mills, a textile company based in Birmingham, Ala. Although that business was successful when Bew joined in the early 1970s, he foresaw trouble on the horizon.

Bew was the first member of his generation to join the business. “Right after I came in, four of my cousins came in,” he says. “I saw it could possibly be a bloodbath when I got to my 50s and there would be the decision of who would become president.”

Rather than fight with his cousins, Bew struck out on his own at age 28 in 1978. He bought an interest in a small company that made furniture. It was, he says bluntly, a disaster, and he left after nine months to start Vista Corporation, a sales representative agency specializing in selling outdoor furniture. His experience convinced him there was a need in the market for upscale outdoor furniture that would bring the elegance of the living room to the patio.

These were the days before “outdoor living” was a recognized concept in the furniture or real estate realm. Grand houses might have had a big porch with some wicker furniture, but most people plunked a few aluminum chairs, a redwood picnic table or some resin furniture on their patios and called it done.

Bew founded Summer Classics in 1987 and began creating high-quality outdoor furniture that would stand the test of time, in both design and durability. The company made wooden, wrought iron and aluminum pieces, which it sold to independent retailers and stores like Crate & Barrel, Neiman Marcus and Restoration Hardware. As of the mid-1990s, Summer Classics had manufacturing plants in Chile and Mexico as well as the United States.

By 2000, the company had shifted much of its manufacturing operations to Asia and had started making cast aluminum and wicker furniture. Revenues grew, but Bew was frustrated.

“Our dealer base would buy two or three sets of furniture and throw it on the floor with all their other products,” he recalls. “After having spent an incredible amount of time designing product and making it unique, this really had the opposite effect. It threw me into a generic pool of products and downgraded the brand.”

Bew thought if he could show the dealers how to merchandise his wares, they’d soon understand they could make more money.

“I was not very effective at transferring the idea to the dealer base,” he says wryly. In a few instances, he built out a branded shop-in-shop display for clients, but the retailers would end up selling the floor samples, breaking up the display and missing the point of merchandising multiple pieces together.

In 1995, Bew recalled a huge order for Williams Sonoma’s former garden division because he’d learned of a flaw in the paint. To get rid of it, he held a warehouse clearance sale.

“We put a few ads in the paper, and we couldn’t believe how many people came!” William says. That experience, combined with Bew’s vision for lifestyle merchandising, led to the development of the branded retail stores.

Now with 15 stores, Summer Classics Home is one of several divisions that make up the company. The others are wholesale, private label and contract, which supplies outdoor furniture to hotels, country clubs, assisted living facilities and so forth. Total revenues exceed $100 million. Under William’s leadership, a line of indoor furniture called Gabby (named after Gabriella Comer White, Bew’s mother) was launched in 2010.

A roundabout road for G2
In addition to William, their oldest child, Bew and his wife, Wendy, have two daughters: Walker White Dorman, 43, and Wynne White Martin, 37. As teens, all three had summer jobs in the family business, but none was initially inclined to make it a career.

“I was about 13 or 14 when I started doing summer jobs, bringing in raw rocking chairs, planters and fireplace screens to [Summer Classics’ original] facility in Pelham, Ala.,” says William. His duties included filling cracks with putty, using the belt sander and antiquing gold fireplace screens and tool sets.

“It gets real hot in Alabama in summer, and in a warehouse environment it’s not fun,” William says. “It gave me a bad taste in my mouth and made me want to go to college.”

He earned an undergraduate degree in environmental studies from the University of Colorado and then an MBA from the University of Alabama. After stints in banking and then in chemical sales — during which time he halfheartedly interviewed for a few sales manager positions at Summer Classics — he was finally enticed in when Bew bought a retail store in Huntsville, Ala. He joined the company in 2008.

Wynne joined in 2009, after a stint as a stand-up comic in New York City. When a sales rep position opened up, Bew thought she’d be a natural at it, but she had to interview as any other candidate would.

“I can’t be the one to hire you,” Bew told her. Her ease with people and sense of humor earned her the position, and she grew quite successful in it — so much so that she’s transitioning from field sales representative to national accounts manager.

Walker, who briefly worked in PR for the company, left to pursue her passion for ministry.

No spouses or other relatives currently work at Summer Classics. Following a divorce in the family, the company established a policy prohibiting the hiring of in-laws.

Bew’s wife, Wendy, has been his inspirational sounding board. She has been pivotal to the company’s success, albeit behind the scenes.

A health scare and big changes
William joined the company at an inauspicious time. The Great Recession hit right after he came on board. The company, which had not yet established diversified product lines and had fewer distribution channels, was hyper-seasonal. To make matters worse, its main bank was in trouble and its other lender was also in dire straits.

“I wondered if I should go ask for my old job back,” William says.

Bew acknowledges there were moments when he doubted the business would survive. Fortunately, Summer Classics was able to repay its loans, and today the company is debt-free with a healthy cash reserve, Bew says.
Although the company had survived the recession, it was siloed and lacked formal structure. It didn’t have an organization chart or an HR department, says William.

“VPs were swarming around Dad all the time asking what do next. It was not sustainable, not scalable.”
William was running the Gabby division, but differently than Bew ran the rest of the company, and they had butted heads over the issue of structure.

“There was not a lot of connective tissue between what I was doing and what he was doing,” William says.

When Bew had a health scare in 2013, both realized the current arrangement wasn’t sustainable for the long term.

Bew had trouble breathing. Doctors in Atlanta found blood clots in his lungs and legs. That experience made him nervous about the future of the company.

Before he fell ill, Bew had attended a conference of the Society of International Business Fellows in Toronto. The keynote speaker was Dick Cross, author of multiple books on leadership. He and Bew had gotten into a discussion about succession planning when Bew explained his son was in the business but not engaged in his brand.

From the hospital, Bew called Cross and said, “If I die, will you take over the company?” Cross flew down to have a look.

“He audited the business and came and sat with me,” says William. Cross told William the company didn’t have the structure it needed to manage its rapid growth.

“He said, ‘You guys are way out in front of your blockers. You have to have key management in each ­division,’” William recalls. “I got really excited when he said that, because I always wanted structure. Historically, we had the wrong people in the wrong seat. A sales guy would come in and he and Dad would hit it off and next thing you know the guy’s running our ­operation.”

Cross hit the reset button. He built a structure, creating an organizational chart and helping the Whites hire some good managers. He also helped with succession planning and creating a holding company structure.

Cross remained for about 18 months. After his departure, Bew wanted William to move up to president of Gabriella White LLC, the parent company to Summer Classics and the other entities. William agreed, but he still felt the company needed more structural work.

Before Bew’s health scare, William had become involved with Entrepreneurial Operating System (EOS), an organization that offers a concepts and tools to help entrepreneurs run their companies successfully and acts almost like a board of advisers.

When his father offered him the president’s job, “I said yes on one condition: that we look at the EOS system,” William says. “I wanted to present it to the management team.”

A certified implementer of EOS came in and spoke to 10 Summer Classics vice presidents. “Everyone was excited,” William says. “They were tired of going to endless meetings with nothing accomplished.”

EOS advocates imposing even more structure than Cross instituted. The system also involves developing core values and using those values to hold people accountable. It calls for a visionary CEO, an integrator president and no more than seven reports per manager. Luckily, Bew and William each fit their respective positions well. They also hired a process improvement manager.

Even though everyone eagerly said, “We need to do this,” not everyone was ultimately happy with what “this” turned out to be, William notes.

“A lot of people are not with us anymore. We realized some of these people had been with us 20 years, but they don’t have our core values.” The values fit the acronym DESIGN: Dedication, Enthusiasm, Synergy, Integrity, Goal-Oriented and Nimble.

Summer Classics has never been better, according to William. Independent patio stores are declining in general, but Summer Classics’ margins are strong, William says.

Last year, Wynne launched a line of indoor and outdoor pillows designed to complement both Gabby and Summer Classics furniture. She named it Wendy Jane in honor of her mother.

Transition of ownership
Although Dick Cross started Summer Classics on the path to structure and EOS further refined it, there was no avoiding the fact that Bew was getting older. His health scare drove home the need to plan for transition of ownership. He and William realized the estate tax implications could be substantial.

Again, William sought outside expertise. He turned to The Beringer Group, an advisory firm for private businesses and family foundations.

“I read an article from The Beringer Group all about transitioning, succession planning, protecting the family business as you transition, estate planning, etc.,” William says.

The family had a stable of advisers, but the article presented concepts that sparked new insights. William reached out to John R. McAlister II, vice president with The Beringer Group.

Bew, true to form, at first was skeptical. After his initial contact with William, McAlister called Bew, who sent him back to William.

William told Bew he had to participate in a meeting with the firm. “It was funny,” McAlister says, “because Bew immediately saw what we could do to get [the business] down to the next generation and reduce taxes.”

Beringer advisers met individually with the White family members and also conferred with the family’s attorneys and CPA.

“It’s good to have someone kind of quarterbacking the whole transition,” William says. “If it came from me, [family members] might think, ‘Maybe there’s some selfish reason why he wants it this way.’”

The Beringer Group designed a plan to transfer a significant portion of the operating company using a series of gifts and sale of non-voting shares to generation-skipping transfer trusts — one for each of Bew and Wendy’s children.

Voting control remains with Bew and Wendy during their lifetimes and then passes to a trust after their deaths.
The plan provides for the inactive as well as the active shareholders and empowers the second-generation family members who are active in the business to make operating decisions while Bew and Wendy have oversight on the transition today.

The plan came to fruition over the course of about 19 months, from mid-2016 through December 2017.
Walker, who doesn’t work in the company, participates in family meetings about the business, held at least annually and often more frequently.

“We’d love to pass [the business] on,” Wendy says. “We thought about selling it at one point, but I’m glad we stuck it out and family came in and wanted to be involved. We had to do some maturing, but it worked out great.”

Bew has scaled back but has not set a retirement date. “We’re not sure how we’re going to define retirement for him,” William says. He adds that before he moves into the CEO role, a candidate will have to be chosen to succeed him as president.

“I had in my mind I would go to three days a week when I turn 65 and then retire at 70,” Bew says. “That’s all moved back five years, and the current plan is to go to three days a week when I turn 70 and not retire. Looking at Warren Buffett, I’m not sure retirement is a good idea for anyone. I like to keep my mind working.”

What he has done, however, is increase his vacation time. He will take 12 weeks’ vacation this year and plans 15 weeks next year.

“If you go away, they figure things out,” he says of his son and the management team.

McAlister recalls William’s words at the closing table: “We’re going to make it as a family business. [The next generation] will have a chance to come in here and prove themselves. I’m going to do everything I can to help them.”                                                                 

Hedda Schupak is a frequent contributor to Family Business. She recently profiled Round Room LLC.

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

Overcoming emotions and conflicts to plan for leadership succession

The influential founder and chair of a multibillion-dollar family company suddenly fell ill. The founder and chair had worked closely with a non-family CEO on a day-to-day basis. Financial performance was deteriorating. The board was concerned about the future of the business and recommended replacing the CEO.

The company’s COO was suggested as the CEO’s successor, although not all board members supported this choice. Without the full support of the board and family, the company had to find additional CEO options. Further complicating matters, the new chair of the board, who succeeded the ill founder, was an inexperienced family member. A controlling shareholder of the company, who was a family director, expected the new chair to be the next CEO.

If this story sounds like a rarity, it’s not — particularly in family-owned businesses, where multiple factors complicate the selection of a new leader. Issues of founder mortality, the perception that the CEO and brand are inseparable, and assumptions about future roles of family members all intertwine, leading overwhelmed company leaders to delay or ignore succession planning.

Unfortunately, procrastination often leads to devastating consequences for the business. PwC’s 2019 U.S. Family Business Survey found that a mere 18% of respondents had a succession plan that was documented and communicated. Additionally, family-owned companies often have the same leaders for 20 years or longer, compared with the average public company CEO tenure of about five years, making transition planning a low priority until a triggering event occurs.

Why succession planning takes a backseat
One reason family CEOs tend to avoid the topic of succession is that it leads them to consider their own mortality. Additionally, when CEOs are also founders or born into the business, they often remain at the helm past the time when they are able to be strong contributors because they feel such strong ownership of the company. Furthermore, the board and other owners might be reluctant to ask an iconic leader to step down, which leads to delaying the succession conversation until an emergency occurs.

The family business discussed above found itself in an emergency situation as the business quickly deteriorated without the presence of the influential founder and chair. The board and CEO had not prioritized succession planning, instead hoping that good leadership would emerge. Without full support from the board, the plan for the COO to assume the CEO role was more of a suggestion than a strategy. The new chair, realizing he needed help, engaged us to assess the CEO options, and we concluded that the best candidate was, in fact, the unsupported COO. However, the controlling shareholder pushed back after our assessment and benchmarking exercise. We advised the family, “If you have any doubts, don’t put the COO into that role.” 

In family businesses, the CEO expectations can be complex. Competencies and skills matter, but culture fit and trust are equally important. In this situation, the shareholder did not trust the COO (although the individual was the right fit on paper). Given these internal dynamics, it would have been difficult for an external leader to come in and be successful. A deeper talent assessment found a high-potential candidate in another part of the business to assume the CEO role. This candidate was not an obvious choice. He had never led a relevant business, but he was highly capable of succeeding with the right support system in place.

In this situation, the family and leadership were not aligned on succession planning — from who owned the decision to how to conduct the process. Another reason family businesses avoid this topic centers on the difficult conversations that inevitably arise. How does a board or a CEO tell an heir apparent they’re not the right person for the job? In most cases, the senior leadership, the board or the family (or all of these) know the shortcomings of a potential leader, but they keep quiet because of the emotions involved. Sometimes an objective third party can help deliver difficult news and be an objective listener and mediator. The multibillion-dollar company in our example understood that having the right CEO was essential and prudently gathered external data to expand the successor options rather than make a complex and critical business decision based solely on internal perspectives.

The risks of solo planning
A one-sided approach to succession planning can alienate stakeholders and potentially destroy value. Take the following example: A third-generation CEO has anointed his son to be his successor. The current CEO’s cousins, who are also owners and board members, believe the son could be capable of being CEO in the future, but he is not ready now. Compounding matters, the business faces a difficult industry environment and is underperforming financially, making the owners highly concerned about an unprepared leader. The CEO has threatened to leave if the other owners make his son wait 10 years until they think he is ready. The CEO also will not allow the board to have a conversation about the succession plan or allow his son to have a voice in the conversation. The owners are considering selling their shares in the business because they feel as if they have no control over its future.

When pushed, some family CEOs may develop a succession plan based on what they personally believe is important (e.g., continuing a legacy, bringing in an external candidate) and expect the rest of the ownership group to accept it without question. When the plan isn’t shared, there is no opportunity to address parts of the plan that could be negotiated. For example, if a CEO selects a successor who is not prepared to fill the role, the board could push for a development plan, coaching or new team members to provide skills and capabilities the successor lacks.

The expense of emergency planning
Waiting to find a successor until a triggering event occurs is expensive — not just financially but also emotionally. The CEO of a $1 billion company hit retirement age, felt he was not being compensated properly and was ready to leave the company. Another family member was a vice president who both wanted to be CEO and believed he had the right to be. However, the board and the current CEO didn’t believe this VP was right for the position, so an outside COO was brought in to be groomed for the top job.

With the clock ticking on the CEO’s retirement, a few issues came to light. A talent analysis confirmed that the VP was not right for the CEO role and also uncovered some issues with the incoming COO. A new candidate had to be brought in, and both the VP and the COO left the company.

Because this succession was prompted by a problem, there were very few options for CEO candidates. Had the company engaged in planning a few years earlier, there could have been a COO in place who had the potential to grow, or the VP could have embarked on a development plan earlier so as to be ready to assume the CEO role. The situation was also costly in that two high-level leaders left the company and needed to be replaced.

Navigating emotions
Family businesses can benefit from the following guiding principles:

• Start earlier than you think you should. As illustrated in the examples, most companies lack a perfect candidate within the organization. Advance planning provides time to develop people internally as well as to consider external talent that can be brought in and groomed for a higher-level position. It also creates the opportunity for external leaders to develop trust among the family ownership group. If an internal successor is groomed, the fact that they have gone through all the right steps will engender family trust. 

• Articulate what’s important to the family and the business. Given the complex dynamics of a family business, it’s essential to create an environment where everyone feels heard and to facilitate an open dialogue about the future of the company. What is important to the family? Is it perpetuity, long-term employment, the environment, social impact? How important is it to have a leader of the business from the family itself? Does the family leader need to be the CEO, or can this person be chair? Is it important to support next-generation involvement in the business? By understanding the parameters, the family can clarify the tradeoffs and their implications in a robust discussion. Having multiple opportunities to discuss these questions will aid family cohesion in the long run, even if it’s uncomfortable now.

• Define the roles and rights of all stakeholders in the succession process. Defining the role of the ownership group, the current CEO and the board will provide the family a voice while also ensuring clarity in the decision-making process. It also ensures that the right (and most qualified) individuals are weighing in on a very critical decision — to whom will the future of the family business be entrusted?

• Proactively communicate with the ownership group about succession planning. Letting the family know the timeline for succession, and informing them of the role of the board and the steps in the process, builds trust that the issue is being handled professionally, with the goal of identifying the best leader for the business. While it’s not appropriate to share candidate evaluations with the family, assuring family stakeholders that a fair and objective process is being followed can increase their acceptance of the outcome.

Succession planning in family companies is a difficult process. It combines emotional and organizational change and all of the associated feelings. Proactive planning alleviates some of the stress, offers more talent options for the CEO role, provides the family a voice in the process and gives the company a much better chance at surviving for multiple generations.                                                  

German Herrera leads the Family Business Advisory and the Industrial Practice for North America at Egon Zehnder. Julie Kalt is a research principal and North American practice specialist for assessment and development at the firm. Jennifer Pendergast, a senior adviser to the firm, is John L. Ward Clinical Professor of Family Enterprises and faculty director of the Center for Family Enterprises at Kellogg School of Management at Northwestern University.

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

MacLean-Fogg manages multiple transitions

Although many people have encountered MacLean-Fogg Co.’s products, they probably haven’t noticed them, unless they’ve looked at the hardware that sits atop telephone poles or the parts inside car exhaust systems and transmissions, such as gear blanks and wheel nuts.

The company, built by the MacLean family over the past 94 years, now generates $1 billion in annual revenues. Its success attests to its ability to live up to its founder’s goal, as stated by Duncan MacLean, the president and CEO: “We solve customers’ problems for a fair price, on time.”

Today, the company, based in Mundelein, Ill., operates 23 factories all over the world that make engineered components for the electrical, telecom and automotive industries. MacLean-Fogg has two primary businesses: MacLean-Fogg Power Systems, which serves the electric utility, telecommunications and civil markets; and MacLean-Fogg Component Solutions, which serves the automotive, heavy truck and other industries.

As MacLean-Fogg’s leadership moves from the third generation to the fourth, the company is managing change on several fronts: in its leadership, its board, the shareholders, the family foundation and the family office.

“This company and this family are going through predictable but profound transitions in both leadership and governance,” says Rodney L. Goldstein, co-managing partner of Wealth Strategist Partners, a firm that manages wealth and advises large, complex families with substantial assets. He started informally advising the family almost a decade ago and joined the board several years ago.

Barry MacLean, 80, the sole third-generation member in the business (with the exception of his brother David, who serves on the board), remains as chairman but has turned over the president and CEO role to his son, Duncan, 47. Barry’s five children are becoming active shareholders: Liz Larned, 57; Margaret MacLean, 54, who recently left her position with the operating business; Duncan; Gillian Growdon, 45, who runs the family office as executive vice president of shareholder relations; and Adrian Jay, 43.

The transitions, some of which are still ongoing, have been taking place — with careful planning — over the past several years.

“A company doesn’t get to be 94 years old if you do things impulsively,” says Duncan.

Nuts-and-bolts roots
The company was founded in 1925 by John A. MacLean, the great-grandfather of the current CEO and his siblings. He was followed as president by his son, John A. MacLean Jr., and, in 1972, his grandson Barry.

The company started out manufacturing nuts and bolts, primarily for railroad cars. (The “Fogg” in the company’s name recognizes Jack Fogg, an early employee who was key to the success of the business because of his connections in the railroad industry.) Over the years, ­MacLean-Fogg has expanded to make parts for automobile manufacturers and power companies.

Barry grew up with two older brothers, spending many Saturdays at the office with his father. He loved building things and tinkering; he recalls heating up lead to make lead soldiers and building a chicken coop with his oldest brother. “I had several businesses in high school and college and enjoyed working with my hands to solve problems and offer services in my community,” Barry says.

He graduated from Dartmouth College with a master’s degree, then came to work at the family business with his oldest brother, John A. MacLean III. They worked together for a year before his brother was killed in a plane crash. (David, the middle of the three sons, pursued a different career path and never worked for the company except as a director.)

Would his older brother have taken over the company if he had lived? “We very much enjoyed working together. We both liked building things, and we dreamt about growing the company,” Barry says. “We’ll never know who would have been in charge if he had lived.”

Barry gradually bought out the shares of his older brother’s family, as well as those of the middle brother, consolidating the ownership.

During the 1978-80 recession, the company saw its sales plunge, with business from the railroad industry shrinking by almost 90%. “Everybody took a hit financially, and we weathered the storm,” Barry says.

With the railroad business taking a while to recover, Barry focused on building the automotive business. He eventually sold the railroad part of the company and made an acquisition to start supplying the power industry. For a time in the mid-’90s, MacLean-Fogg also made products for the healthcare industry.

MacLean-Fogg’s 1986 acquisition of Reliable Power Products marked the company’s entry into the power business. That was a pivotal decision, Gillian says. “It diversified the business significantly and allowed us to ride through the cycles of the automotive business.”

Barry’s children remember the easy mixing of business and family as they were growing up.

“We really were a family business — customers and colleagues of my dad were always coming and going through our house,” says Adrian. “My mom had the ability at the drop of a hat to entertain people.” Barry’s wife, Mary Ann, died in 2016.

Adrian and her husband are co-founders of Random Acts of Flowers, a non-profit organization that delivers bouquets of recycled flowers to people in hospitals, assisted living facilities and hospitals. She has never worked full-time for the company but is very engaged as a shareholder, working with the MacLean Family Foundation and bringing her children from Tennessee on plant visits, for family assembly meetings and to the annual company Christmas party.

“We had this wonderful enterprise, but there wasn’t ever any pressure that this was your path,” Adrian says. “If you had another path, there was full enthusiasm and support.”

Leadership transition
Duncan’s ascent to the role of president and CEO was the culmination of years of training at the company and with one of its partners.

“I started in quality control and learned what happens when something goes wrong with the manufacturing of complex parts,” Duncan says of his early jobs with MacLean-Fogg, during high school and college. He also worked in the maintenance department doing cleanup.

“These are the kinds of jobs that were hard at the time but have paid real dividends — all the guys know that I haven’t always had a desk job,” Duncan says.

Later he worked in the machine shop, which convinced him that he wanted to be an engineer.

Duncan joined the company full-time as a manufacturing engineer for MacLean Power Systems right after graduate school, in 1996. He was elected to the board in 1998. He points to two pivotal events in his career: his move to Germany from 1999 to 2003 and his management of the automotive side of the business through the 2008 ­recession.

MacLean-Fogg and a German company were partners in a U.S.-based joint venture, Metform. The German partner asked Duncan to work at a separate facility, Erich Neumayer GmbH. Duncan says that during those years he learned not only about another culture but also about other ways to do business. He also started a business there for MacLean-Fogg.

He became president of the auto side of MacLean-Fogg in 2008 and was immediately challenged by the recession. He managed the business very tightly and closed or sold five plants. Most of the production assets of the German business he had started were sold at this time.

“The recession made me the executive I am,” Duncan says. “It proved to our banks, the board and my father that I wasn’t just the son, I was a competent executive.”

Duncan notes that the recession also changed the culture of the company. “In 2009, we started to make really tough business decisions,” he says. “We installed modern thinking. That was critical for our success. The auto side doubled in size in the succeeding eight years.”

Duncan took over as president of all of MacLean-Fogg in 2015 and as CEO in 2017.

“This has been a natural evolution,” Goldstein says. “It’s been carefully guided, but it has worked in large measure because Barry determined that perpetuation of the business was a high calling, and because Duncan has great capability and terrific experience, as well.”

The transition means more than just a new family member as CEO.

“My dad is a real visionary — he grew this business from a small family business to what it is today,” says Adrian. “My brother has his own style and has proven to be an incredibly capable and innovative operator. It’s exciting to see not only the transition in leadership but also to see a different style.”

Board transition
The transition to a new CEO is also leading, gradually, to a revamping of the board of directors.

Independent directors have served on MacLean-Fogg’s board for decades. Today, the board consists of four family members and seven independent directors.

“We have a lot of very intelligent people on the board that have had the best interests of our family at heart for many years,” Duncan says. “As we transition the board, we’re going to start thinking about the specific skillsets we need. We are no longer a mom-and-pop business — the problems we’re facing now weren’t conceivable many years ago.”

A governance committee, a subset of the board under Goldstein’s leadership formed in 2018, is looking at how the board’s composition may evolve. Committee members are considering the ideal size and mix of experience to support the new CEO and the company’s next chapters. The committee is building a bridge between the board and the shareholders, meeting twice a year with the next-generation shareholders, Barry’s children.

“That bridge hadn’t existed before for the non-operating shareholders,” Duncan says. “Now we are making sure the shareholders stay plugged into how the values of the family are playing out in the business, understand the risks of investments, and know the other duties of shareholders.”

Family governance transitions
The MacLean family office is also in transition, moving from primarily supporting Barry to now supporting all six shareholders, as well as other family members.

“Everything has grown in complexity from the way it has historically been managed,” Goldstein says.

The family office has existed for more than a decade. Until recently, it primarily supported Barry. In May 2016, Gillian took over the family office as part of the effort to expand it to serve the households of all six shareholders.

As executive vice president of shareholder relations and head of the family office, Gillian oversees family estate planning, tax planning, financial planning, shareholder education for the current generation of shareholders and the next, and family gatherings and retreats. She also oversees, in consultation with Barry, the family’s investments outside of MacLean-Fogg, in private equity and other small operating businesses.

The initial priorities for her office, as set by the family shareholders, were to kick off education of the next generation with a family assembly, increase communication and transparency, manage family-owned assets and offer help with tax compliance.

“The first thing was to get everyone together and tell them about our legacy, stewardship, and what the company does. We’d never actually done that,” says Gillian.

“Since then, we have learned more about what we call the ‘black boxes.’ How do the ownership trusts work? What other companies has Dad invested in? The family office started unpacking these, with an appropriate review with my dad, so we could make a decision and move along.”

A key part of this transition is separating the operating company and the family office.

“Duncan leads the operating company, and Gillian leads the family office,” Goldstein says. “We are going out of our way to separate the two so the board can be focused on operating matters, while also ensuring that there is consistent communication and transparency across the two.”

Along with the leadership changes have come changes in ownership. The company’s six shareholders are Barry and his five children. Although the fourth-generation siblings have long been shareholders, the majority of the voting shares have remained with Barry.

Barry is now transitioning the leadership and responsibility of being a shareholder to the fourth generation. No members of the fifth generation are shareholders yet, which is a future area of focus for the company.

The shareholders have made a formal decision that the perpetuation of the business under family ownership is a key objective — giving the board clear direction about the shareholders’ desires.

The MacLean Family Foundation is also going through changes, becoming a full grantmaking foundation. Adrian is president; Duncan’s wife, Brooke MacLean, is vice president; and Gillian is secretary. The foundation, the vehicle for the family’s giving, has long supported the Brookfield Zoo and other causes.

The family has faced challenges in making all these transitions work.

“Transitions have a way of testing relationships, and it takes hard work to actively care for them,” says Gillian. “We’re in the middle of that. We love each other, and we have a commitment to this business. It can be hard, though.”

One example: balancing the multiple roles the family members play at work and at home.

“At work, I’m a sister, I’m a daughter, I’m the head of the family office, I’m a shareholder,” Gillian says. “Each of us has many different roles. We all have to practice knowing the context of our conversations to play the right role at the right time.”

Looking to the future
While the transition to the fourth generation is under way, the family is looking ahead to future generational changes. There are 12 members of the fifth generation, ages 7 to 23. Two of them have participated in internships at the company. At family assemblies, the family has started teaching younger family members about legacy, stewardship and the values of the family in business and in life.

In addition to working with Goldstein, the family has engaged Renee Montoya Lado of Strategic Designs for Learning, who serves as a coach for the five fourth-generation siblings and their spouses. Elizabeth Kieff and Tom Levinson of LK Advisors designed the curriculum for the family’s annual assembly and provide coaching for the fifth generation.

It’s too early to identify a successor to Duncan, and family members are open to many options.
“We’ve made the decision that we want this business to exist for generations to come, so we will need to make difficult decisions,” says Duncan. “For example, will we always have a family member CEO?”

The company is investing in technology and “modern ways of thinking,” says Duncan. “It doesn’t mean what we’ve done in the past is wrong. My dad was a terrifically successful CEO by any measure. But if you stagnate, you kill the company. What worked in the past might not work in the future.”                                               

Margaret Steen is a freelance writer based in Los Altos, Calif.

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

An unquestionably good reason to plan

The WM Fares Group of Halifax, N.S., began planning for generational transition when the three second-generation siblings began asking questions about how decisions would be made in the future.

Wadih Fares, the 62-year-old patriarch and founder of the property development company, has the last word on business decisions. But in 2012, his children began to wonder how the process would work when he was no longer at the helm.

With that question in mind, the family took a page from their playbook as successful builders and laid a foundation for the future. Family-centric procedures and a new, detailed succession plan are now in place.

“It was very difficult for me, but it is the only responsible way to make plans for the future,” says Wadih. Two of Wadih’s three children work for the family company. The third, an entrepreneur who runs her own healthcare company, is also part of the succession plan.

“My father realized during this process that it’s not going to be as simple as ‘his way or the highway’ forever,” says Wadih’s son, Maurice Fares, 31. “With three young professional owners coming up, more questions are going to be asked.”

Preserving family harmony is paramount in this family business. “We’re all very close, and those relationships will always be the most important,” Maurice says.

From the ground up

Wadih founded the WM Fares Group in 1983, less than 10 years after he fled civil-war-torn Lebanon, his native land, and went to work doing odd jobs like cleaning up construction sites for an uncle in Halifax. He was supported by those jobs and family connections while he studied engineering at Dalhousie University, a juggling of responsibilities that was especially challenging because he did not speak much English at the time. His first project was a small, single-family home he designed for a friend. His second was a 12-unit apartment building that the same friend — now a satisfied customer — wanted to build. Word of mouth, fueled by an unrelenting work ethic, led to greater successes.

Today, buildings designed, built and managed by the WM Fares Group shape the Halifax skyline and streetscape. The company’s projects also can be found in communities throughout the Maritime Provinces, Ontario and Alberta. Wadih himself, still very active in the business, also serves as Honorary Consul of Lebanon for the Maritimes. He holds a seat on the Dalhousie University Board of Governors and on the Nova Scotia Minister’s Immigration Advisory Council. He has received awards and honors from organizations spanning three continents.

Perhaps the company’s signature project to date is the Trillium, a $40 million mixed-use development in the heart of Halifax that was the first skyscraper built downtown in 25 years. “My father still calls it his baby,” says daughter Zana Fares-Choueiri. “He broke ground during the crash of 2008, and it really put us on the map.”

Zana, 34, an engineer who joined the business in 2006 and now runs the company’s construction operations, remembers the date well, since her first child was born on the day of the groundbreaking. “When we were building the Trillium, it was the only project downtown,” she says. “Now you see four or five cranes going all the time.”

Building on their reputation

The WM Fares Group is built on a business model that brings together all the various components of real estate development projects. It finds opportunities, sites and financing. Its architects design buildings that its construction arm builds. Its management division finds tenants and operates properties. The company has about 15 employees in the office and another 15 who work outside the office in property management and construction supervision.

In addition to building for other developers, WM Fares competes with them for sites and projects that it builds for itself. As one might imagine, working that way with competitors isn’t possible without their trust. “Ninety percent of the developers in the city are my clients,” Wadih says. “That goes back to the reputation you build for yourself through the service you give day in and day out.”

Family ownership adds to that reputation, according to Zana. “When it is your family’s business, you take more pride in the projects and what the company is doing,” she says. “You have more responsibility to make the product great. A customer who sees my father, my brother and myself working together [has] a good feeling. They get some security from it.”

Zana oversees construction projects. Her brother Maurice supervises property management and serves as VP of operations. He is Wadih’s right-hand man and designated successor. Both he and Zana grew up in the business and value their father’s guidance. “When you feel like things are a little bit overwhelming, it’s good to have someone there who’s been through it before,” Maurice says. “He’s always quick to remind us that we’re not the first people to build and manage buildings. We’re going to have good times and bad times, and we just have to enjoy doing it.”

Running the business can sometimes be complicated by family ties, however. “It’s very difficult to separate family issues and business issues,” Zana points out. “There are a lot of family issues discussed in the office and a lot of business issues discussed outside the office. We try very hard to separate the two, but many times issues will come up in a casual setting.”

As the patriarch, Wadih outranks his children and can overrule them. “At the end of the day, it’s his final word,” Zana says. “Having said that, we are part of the discussion,
and we can change the way he looks at something. We bring information to the table, and many times he will change his mind.”

For example, Zana describes a discussion with her father about the timing of asphalt paving installation around a building. “I explained my reasons, and he went with my decision,” she says.

Answering key questions

Maurice says the family realized the need to move forward on a succession plan soon after he joined the company
full-time. Zana, his older sister, was already working in the business. His twin sister, Monique Fares, was finishing her graduate education and preparing to pursue an entrepreneurial path in healthcare.

“Three young adults, who were all educated, were starting to ask questions,” Maurice says. “They hadn’t asked before, but now they were interested in knowing.”

Maurice says Wadih was proud that the questions his children were asking were the right ones. “He wanted to
make sure everything is laid out for us,” Maurice says.

A succession-planning firm had been in touch with the family, and Wadih agreed to start the process with those advisers. Through a lengthy series of conversations about the future, Maurice says, “we put a blueprint together.” The family developed a variety of strategies: a shareholder agreement for the second generation, ownership and management structures, share structures and tax planning. The process took about a year.

“What’s nice about it is that we’ve all agreed on a certain way this company is going to be run in the future when Mom and Dad aren’t around anymore,” Zana says. “But it’s more than who’s going to be running the show. Our own wills are attached to the succession plan. It’s who is going to end up with the wealth in the end, how they’re going to get it and how our children fit into it. Trust funds and insurance plans are all part of the document.
It was very complicated, but the process involved all of us and we all had a say in how we wanted our money to be handled.”

That included spouses as well as Monique. “From my standpoint, it went very smoothly,” Monique says. “Our entire family has a great working relationship, and I trusted the decisions they were making about the company.
They kept me very informed about the decisions they were making.”

Their mother, Cathy, participated in the discussions also, not surprising given how involved she has been with the company since its early days operating from her kitchen table. “I am the sounding board in the family,” Cathy says. “I am the one the kids can come to, and I’ll talk to their father.” During the succession-planning process, Cathy says, “I made sure Monique’s voice was heard, for example, as well as my son- and daughter-in-law’s.”

The process was completed in 2016 and, as far as Wadih is concerned, everything is settled. “We made some hard decisions as a family about how [they] are going to run the company after I am gone,” he says. “Maurice will be in charge. All major financial decisions will be made between him and his sisters. A two-out-of-three vote will make major decisions.”

Looking ahead

Maurice and Zana are happy with the plan for the future operation of the business, but note there will always be room for change. “I call it ‘Phase One,’” Maurice says. “If we sat around and talked about the future of the company now, it might be different because some people might think differently than they did a few years ago. It’s an evolving, multi-phase process, but it helped everyone be more comfortable.”

“In the short term, we will continue to run the business as it is,” Zana says. Farther out in the future, things might change, she notes. “Some of us may say we’re going to keep working until we’re 80 years old, while some of us may say, ‘Why do we need to do that? Let’s try to retire and not work our whole lives if we don’t have to.’ We’re very fortunate to be in that position.”

Wadih takes a long view, too. “What I’m doing now, I want my children to do for their children,” he says. The third-generation members are currently all under age 10.

“It’s important to organize your affairs and make sure the family is still together,” Wadih says. “Family unity is the most important thing.” 

Dave Donelson is a business writer in West Harrison, N.Y.

Succession plans must incorporate liquidity planning for the family

The path from starting up a business to planning your exit is a winding one, with plenty of speed bumps and potholes. One of the biggest potholes results from the failure to include liquidity planning as part of the business succession planning process.

As part of the preparations to sell the company or pass it on to a family member, a business owner should develop a wealth management strategy that minimizes taxes.

Regardless of the size of their companies, all business owners should create a succession plan that meets their personal needs as well as the needs of the business. The effect of the asset transfer on the business owner’s estate plan should also be addressed. If the business is sold, the entire family will be affected by the transaction. A well-thought-out and well-executed personal plan provides greater opportunities for generational wealth creation and helps reduce anxiety. 

Here are some questions family business owners should consider as a first step in the planning process, along with examples from a real-world family situation.

Is selling the business the best option for your family? Many business owners need an exit plan that provides retirement income for themselves and their spouses. Those who want to name a family member as their successor may be torn between realizing the dream of continuing family ownership and meeting their personal liquidity needs. Another complicating factor arises when the prospective successor is not yet ready to lead the business. With proper planning and time to address these issues, a strategy can be developed that provides an income stream for the retiring leader.

As Mr. Smith approached his 69th birthday, he realized that no member of his family was ready to succeed him at the helm of his company. Neither of his children had joined the business. His nephew, who worked in the company, was only 27 and needed at least a decade’s worth of experience before he’d be ready to take the reins. At that point, Mr. Smith would be nearly 80. He began to rethink his plans and decided to sell the company. Eventually, we helped him structure a succession plan through a private equity buyout that allowed him to exit the company just before his 71st birthday.

Are you and your spouse interested in charitable giving? It makes sense to time a philanthropic gift so as to counteract capital gains taxes. Techniques to maximize charitable giving and minimize income taxes can be executed prior to your exit from the business. You and your financial adviser should determine which strategy — such as a donor-advised fund, a family foundation or a charitable trust — would work best for your financial situation. Additionally, creating a charitable vehicle can provide the family with an opportunity to continue to work together after the family business is sold.

The Smith family wanted to give back to the community that supported their business. Mr. and Mrs. Smith also wanted the family’s next generation to participate in their philanthropic endeavors. During the business succession planning process, the whole family discussed their charitable goals. The Smiths created a donor-advised fund and transferred some of the company shares to the fund. The fund held the shares until the company was sold. When the transaction occurred, there were no tax implications on the shares of the company held within the donor-advised fund. After the sale, the family used the liquidity within the fund to make gifts to local charities.

Special Section: The quest for liquidity

The ABCs of PE

Private equity pros and cons

Family offices: 'Quiet capital'

Creating shareholder liquidity: A checklist before going public

Should you establish trust funds for your children/grandchildren? If you want your children and grandchildren to benefit from the sale of your business, it may be more beneficial — for both you and them — to establish a trust and fund it with business interests before the ownership transition. Simple planning techniques implemented before an event can significantly increase the transaction value for the family as a whole. In addition to being tax-efficient, a trust allows you to establish provisions governing how and when money will be distributed to your heirs.

The Smiths wanted to set aside money not only for their children and grandchildren, but also for their nephew, who had worked in the company since his teenage years. They wanted to encourage their nephew’s entrepreneurial spirit now that the operating company was to be sold.

The Smiths established a trust — funded with stock before the sale — to benefit their children and grandchildren. The trust was structured so that the children and grandchildren could access money immediately for education and health needs. More generous access was delayed until later in life, because the parents felt it was important that each member of the family have a strong work ethic.

The business’s real estate holdings were not part of the sale; the Smiths gifted these interests to a trust for the nephew’s benefit. The nephew became actively involved in managing the real estate.

How will each family member handle the wealth? This may be the hardest question to answer. If your family didn’t always have significant wealth, will everyone be able to responsibly manage money after your liquidity event? This is something you’ll need to discuss candidly with your spouse. It is important to develop a life plan for you and your family members after the transaction. Most importantly, take time before the liquidity event to educate the family and discuss your goals and expectations.

Many business owners begin the education process well in advance of a transition. Turning over a small amount of money to family members gives them experience in working with an adviser and offers insight into how each individual might invest (or spend) in the future. This information can be helpful in determining whether to turn over future assets outright or in trust.

In the months leading up to the sale of the Smiths’ business, they held facilitated educational sessions and family meetings for their adult children. The conversations were dynamic and included not only financial matters, but also the family values and mission. This helped promote stewardship of the assets.

Planning for the future
Pondering these questions and working with your advisers to come up with answers will help you to develop a business succession plan in parallel with a family financial plan. You may not be ready to retire or exit from your business right now, but having a plan in your back pocket will smooth the way for you, your company and your family when it’s time to think about a transition.                      

Amy M. Kane is a senior wealth planner and Brooks Rarden is a senior portfolio manager for U.S. Bank’s Private Wealth Management. Both are based in Denver.

Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact


Protecting your family enterprise from the scourge of 'transition shock'

CNBC analyst Jim Cramer raised some eyebrows recently when he stated on his show, Mad Money, that Walmart was going toe-to-toe with Amazon; Walmart isn’t generally seen as a rising powerhouse in e-commerce. But this comment by Cramer about Walmart CEO Doug McMillon drew even more of my attention: “As long as he’s got the backing of the family, he can afford to take some short-term hits in order to grow the company’s e-commerce presence. That’s a real rarity in this game.”

Cramer was, of course, referring to the Walton family, which owns just over half of the massive company. Whether his analysis of Walmart’s competitive position in the online space is on point is not yet known. Regardless, it’s clear that Walmart, founded by Sam Walton in 1962, has maintained its rise while remaining a family-controlled enterprise—and an extraordinarily successful one at that.

Not all family businesses experience smooth generational transitions; even the Gucci empire fell victim to family infighting and scandal. Thousands of mom-and-pop enterprises, formed as sole proprietorships with the hopes of passing the business down to future generations, have instead ground to a screeching halt.

In my decades of advising family businesses, from startups to billion-dollar corporations, one theme repeatedly emerges: “transition shock.” Transition shock happens when family business owners fail to understand the critical need for succession planning, mistakenly putting all faith in the power of the family unit to sustain through change. Owners of both large and small family companies can increase the odds of a successful generational transition by incorporating continuity planning into their succession strategies.

Transitions require a new, consistent management approach
Founders start their companies as a means of creating a comfortable life. They might envision selling their businesses before retiring. But when their children grow to adulthood, many business-owning parents decide not to sell and instead think about leaving a legacy for children and grandchildren. When a generational handoff occurs, the decision-making process must be redefined to foster continuity.

Leadership at a sole proprietorship is limited to one or two owner/managers, so decision making is simple. Engaging another individual or two—or three or more—requires a more formal management approach. Those who inherit the business are technically shareholders in a joint venture. There must be clear processes in place to ensure consistency in planning and execution, and that all parties are operating on a level playing field. And that’s in the simplest case, when ownership transfers to direct descendants, such as a sibling group. When others become involved—such as cousins or in-laws—the limits of “shareholder rights” and shared responsibility are tested even more.

Frank Foster, the managing general partner of the Gideon Hixon Fund, shared how this can put be into action. Foster is the great-great-great-grandson of Gideon Cooley Hixon, a Wisconsin businessman who started the Hixon empire through investments made after the Civil War. Many of Hixon’s descendants still manage the family’s interests. In fact, the Gideon Hixon Fund proudly proclaims on its website that the firm “utilizes and expands on the experience of six generations of family business.” Foster noted that the family holds annual meetings and educational programs, and provides internships for younger family members. In other words, relatives in the family business are treated as shareholders. According to Foster, family businesses allocate as much time and as many resources to shareholder relations as public companies do.

What happens when continuity planning is overlooked?
When families put all their faith in “family ties,” they overlook how the complexity of ownership change—and, sometimes, basic human nature—might affect family dynamics. A 2014 PwC report noted, “Conflicts in family businesses are rarely caused by poor business performance; most conflicts arise because the family owners perceive that their needs are not met.” Does that sound familiar?

In its best iteration, a family enterprise benefits from the presence of trust, cohesiveness of familial bonds, shared goals and collaborative decision making. But in times of succession, those attributes can fall by the wayside. Researchers cite “reluctance to embrace necessary change, family conflict, refusal to admit ideas from the outside, and nepotism” as detrimental to continuity of a family business and the preservation of family bonds (Mary Barrett, “Theories to define and understand family firms,” in H. Hassan [ed.], Being Practical with Theory: A Window into Business Research, Wollongong, Australia, THEORI, 2014).

While it may seem intuitive that “communication” is the answer, that often only scratches the surface of deeply ingrained resentment and bitterness. In and of itself, communication is not a business strategy but rather a tactic to implement a strategy. Thoughtful continuity planning doesn’t attempt to “talk through” barriers; it recognizes the reality of their existence and factors them into plans. Continuity plans must address not only how business leadership will change, but also how ownership and decision making will change.

If, for example, owners are concerned about a family beneficiary’s business acumen, they might include a requirement for that individual to enroll in a graduate business program or a non-credit seminar, learn through an internal training program or accept on-the-job training for a specific period. There also should be clear upfront expectations about changes as a result of death, divorce or poor performance.

Most important, there should be buy-in to the terms of any ownership change or executive transition: Is ownership transferred proportionately among second-generation owners, or does it take into account the number of children in each family? How will the voices of owners not in leadership roles be included in decision making about the enterprise? Who will hold the next generation of executives accountable for considering the interests of all owners when making decisions about company spending? What governance structures will be established to ensure stewardship of the family assets for generations to come?

In an enterprise that is publicly traded or owned by private equity, this might make for a lively boardroom debate. But in a family, where one person’s hurt feelings affect every other member of the family business system, planning can mean the difference between a generational handoff and the end of the company.

The most important family business asset: ‘patient capital’
Family business owners must consider how committed they are to maintaining “patient capital”—taking a long-term view in decision making, rather than adopting the short-term perspective of an “impatient” trader. Patient capital is essential to maintaining the health and stability of family businesses, especially when there are many shareholders who must lean on this capital when necessary.

Patient capital is the single most important factor that can make or break a family succession plan. When Alan Mulally took over as CEO of Ford Motor Company, he presented his controversial plan to mortgage all of the company’s U.S. assets to hedge against the recession. Bill Ford, then the chairman of the company, called a meeting to discuss the plan, which would essentially mortgage the Ford family name. After hearing from Mulally and investment bankers, Ford dismissed everyone who wasn’t a family shareholder, and a “spirited” discussion ensued. After gaining the unified support of the Ford family to stay the course, Mulally turned down government bailout funds. Ford was the only one of the Big Three auto manufacturers to do so, and Mulally faced added criticism. But not one member of the Ford family ever publicly criticized the decision. Mulally was eventually viewed as a visionary leader. That’s using patient capital.

Patient capital also appears to be a key asset of the Walmart operation. When CEO Doug McMillon determined that the company could gain trajectory in online retail, he successfully sought approval from the Walton family. According to Jim Cramer, it was the family’s approval—not the company’s remarkably solid quarterly financials—that put the online strategy in play. 

Of course, not every family company is as sprawling as Walmart. But all family business owners can increase the odds that their companies will transcend transition shock and flourish by committing to continuity planning, communicating openly, emphasizing stakeholder accountability and contributing patient capital. 

Otis Baskin, Ph.D., served as dean of Pepperdine Graziadio School of Business and Management from 1995-2001 and is currently an emeritus professor of management. As a consultant of The Family Business Consulting Group, he has worked with family-owned businesses in the United States, Middle East, Europe, Asia and Latin America over the past 20 years.

Copyright 2017 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

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