In this issue
When the controlling owner of a multimillion-dollar family business in the financial services industry died suddenly, nobody predicted that Gabriel would want to deliver the eulogy. Gabriel—the patriarch’s eldest son and himself the CEO of a publicly traded insurance company—had left the family business after a vicious falling-out with his father. So when Gabriel insisted on writing and delivering the eulogy, the family agonized over what he would say. The middle sister, considered by other family members to be the family’s go-to leader, insisted on reading the eulogy before the funeral.
Have lifecycle events in your family, such as marriage, birth or divorce, created business ownership issues? Are some family members experiencing a need for higher income from their investment in the business? Is there a need for increased liquidity because of an estate settlement? Have there been outside takeover bids or owner lawsuits? Is a change in management or board membership imminent? Are young adults graduating and pressing for a position with the company?
When a potential leveraged buyout of a third-generation manufacturing business failed to close, a long-simmering conflict boiled over. Two family shareholders not involved in day-to-day operations wanted higher annual dividends and resented what they saw as elaborate compensation for the two family members running the company as chief executive and chief financial officer.
Perhaps the most important—and the most frightening—decisions that business owners will face are when and how to transition out of the business they have built. Yet most owners procrastinate about addressing these issues. They then have to make rushed decisions under duress, substantially reducing both the value of the business and their comfort with the outcome.
Many family businesses have undergone changes over the generations, but few have changed as much as the Pursell family’s enterprise in Sylacauga, Ala. When Jimmy Pursell joined his father-in-law’s business in the mid-1950s, Parker Fertilizer and Parker Ginning were all about cotton, and Jimmy had some catching up to do. “I didn’t hardly know what cotton looked like,” he recalls.
Over its more than 100 years of operation Winston Packaging, based in Winston-Salem, N.C., has been helmed by three very different men, each the right leader for his time: an entrepreneur, a scientist and a marketer.
Alexander Gray (A.G.) Gordon worked as a journeyman bookbinder before founding Winston Printing Company in 1911. In its early years, the company used hot-type letterpresses and lithographic limestone. “As you can imagine, it was a very tedious process,” says A.G.’s grandson, president/CEO James Gordon, 57.
Tips for sibling business partners
Siblings and the Family Business
By Stephanie Brun de Pontet, Craig E. Aronoff, Drew S. Mendoza and John L. Ward
Palgrave Macmillan, 2012 • 105 pp. • $23
Gloriann López recently helped diagnose problems facing a third-generation trucking and hauling company. While market conditions were among the reasons the firm’s profits had eroded, its main threats were internal: lack of loyalty and trust between the new leader and his two siblings, his failure to recognize his sister’s and mother’s involvement, and an absence of formal policies and procedures.