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.
Generation of family ownership: Fourth.
Number of employees: 1,000 globally.
Years with the company: 27. After college I worked for a year for the company in the U.K. in marketing. Then I obtained an MBA and worked for J.P. Morgan and another bank. When I joined Bissell in 1985, I did a rotation to almost every department for a year before officially stepping into my first position in marketing.
First job at this company: I worked in assembly jobs at the factory.
U.S. family business owners were less concerned about market conditions in 2012 than they were in 2010, and more optimistic about growth prospects than their global peers were, according to PwC’s latest global family business survey.
Among the interesting findings in PwC’s latest global family business survey (see our report in Openers) is this statistic: Nearly half (47%) of the respondents, representing almost 2,000 family firms from around the world, believe family businesses can reinvent themselves with each new generation.
One of the most significant challenges facing multigenerational business-owning families is the transition from generation to generation. If the business is to survive as a viable enterprise in a competitive marketplace and remain family-owned, the family must not only engage and educate succeeding generations, but also encourage what Tim Habbershon, founding director of the Institute for Family Enterprising at Babson College, calls an “entrepreneurial mindset.”