In this issue
For many family business owners, debt is a four-letter word that’s synonymous with risk, vulnerability and outside control.
Take Gregory Pettinaro, managing partner of Pettinaro Enterprises, a real estate development and investment group in Newport, Del., with more than $500 million in real estate assets. Pettinaro says he prefers not to risk cash flow by saddling the firm with leverage. This strategy helped the business survive the 2008-10 financial crisis, which resulted in the worst real estate downturn since the Great Depression.
Most multigenerational family companies eventually will buy out a family shareholder, or at least redeem some stock held by a family member. Sometimes it’s the culmination of a planned transition (a retirement), but often it’s emotionally fraught (a payout to heirs after a shareholder’s death or a dispute that culminates in someone’s exit). No matter the circumstances, a disagreement over the price can turn a good situation bad, or make a bad situation worse.
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.
Family business feuds capture the public imagination. Last year, HBO introduced an original series, Succession, that centered on a quarreling fictional family who control an international media empire. In real life, disagreements in prominent business families often make the front page of the newspaper.
The year was 1982. After an antitrust lawsuit that had dragged on for eight years, the U.S. Department of Justice mandated that AT&T Corp. end its vertically integrated monopoly on telephone service in the United States and Canada. For most Americans, the breakup of Ma Bell meant confusing choices and even more confusing bills. But for family-owned, Marion, Ind.-based Moorehead Electric Co., it was the start of an evolution from a local industrial electrical contractor to one of the nation’s largest retailers of mobile phones.
Kyle Fernley has been named the fifth president of Fernley & Fernley, a 133-year-old association management company based in Philadelphia.
Fernley has also been named president of Premier Meetings by Fernley, which handles site selection and contract negotiation for more than 60 annual meetings and conferences.
How important is talent management to family businesses? It’s a major, pressing concern, according to a new survey of U.S. family business leaders by global professional services firm PwC. The percentage of survey respondents who cited “attracting and retaining the best talent” as an important personal goal was higher than the percentage who selected “improving profitability” (85% vs. 76%).
During generational transitions, many family businesses are sold or experience declining business performance and family problems. Inadequate or nonexistent succession plans are generally the underlying reason. Even when succession plans are developed, they often fail to deal with the many quantitative and qualitative issues necessary to properly transition a family enterprise to the next generation.
Running a family business today can sometimes feel like running a marathon in which the course keeps changing. At first glance, it may look as if your goal is as straightforward as it’s ever been: Develop and sell the best product or service in your market.