In this issue
Some women who have taken over a business from their fathers never even expected to work in the family company, let alone become the CEO. Yet once they took the helm, those daughters discovered that they have the right skills, experience and values to guide their companies through the transition to the next generation and beyond.
At a conference table in the sleek, contemporary headquarters of Friedman Realty Group, a real estate investment and management firm in Gibbsboro, N.J., Brian K. Friedman and his son, David, are reflecting on issues that have taken center stage for them: analyzing risk, their business future and structure, as well as continuity, succession planning and exit strategies.
Most family business owners have heard these statistics: 30% of family businesses make it to the second generation and only 13% make it to the third generation. This often-repeated statement, which is widely accepted as fact, actually is wrong.
Ever wonder if there might be a secret sauce that, if poured on family members, would make them easier to get along with? Or maybe a specially formulated epoxy that could repair broken family relationships? Many families are searching for something akin to great-great-grandma's secret lasagna recipe—the one that had the ability to bring everyone together from near and far, even if only for one joyous evening.
In 1955, Herald Smith lost his management job with a trucking company and decided to strike out on his own.
His son John M. Smith was 6 years old at the time. "That was scary, particularly as a young child," John says. "But when my father started to work again, things immediately went back to normal. My dad got started with no money and no credit, and he made a success of it the first year. I had no feel for the kind of risks he was taking."
Considering the high percentage of marriages that end in divorce, a prenuptial agreement (also commonly referred to as an antenuptial or premarital agreement) is a prudent way to protect a family-owned business, its income stream and its assets from exposure. A premarital agreement proactively imposes restraints on a non-owner spouse's ability to delve into the finances of the business, seek a piece of the entity, procure a support award and/or procure attorney fees based on business-related income.
Kentwool, a textile company based in Greenville, S.C., has a diverse customer base that includes golfer Bubba Watson and Amtrak, the passenger railroad service. Family ownership makes the 173-year-old company extraordinarily adaptable, according to fifth-generation CEO Mark Kent. It also allows the company to buck industry trends and keep all its manufacturing in the U.S.
The Business: John B. Campbell, who immigrated to the United States from Scotland, bought an oilcloth manufacturer in Salem, N.J., and converted it to a maker of low-priced floor-covering products called linoleum rugs. According to company records, Campbell bought the business on Dec. 28, 1915.
Generation of family ownership: Second.
2015 revenue: Approximately $800 million.
Number of employees: 1,400 globally, including contractors.
Years with the company: Twelve. I started here after college but left for business school at Stanford for two years and then returned.
First job at this company: Packing boxes in the warehouse.