A herculean effort to sell a company

Intimate Tyranny: Untangling Father’s Legacy
By Jean K. Mason
Centora Press, Cambridge, Mass., 2008
341 pp., $16.95
www.centorapress.com

Raymond A. Kaltwasser (1897-1951) was a skilled businessman who built and ran his successful family company, General Metal Products (GMP) of St. Louis, and was admired by his employees and associates. He was also a mentally ill drug addict who brutalized his family.

Intimate Tyranny, written by Raymond’s eldest daughter from his second of four marriages, Jean K. Mason, chronicles the excruciating, years-long effort to sell GMP. The fractured family relationships that Raymond had left in his wake made doing the deal exponentially more complex, as did the company’s convoluted shareholder structure, which Raymond apparently had set up to punish those considered disloyal. “He made changes to his will in 1950, three months to the day before his death, which reflected his need for vengeance and which would strongly influence the future of the company and his family,” writes Mason.

During the protracted sale negotiations, Mason acted as the representative of her divided family, enduring a litany of flight delays and other indignities as she commuted back to St. Louis from the happy home she had made with her husband in Cambridge, Mass.

In 1945, the year he divorced Mason’s mother, Raymond created a 25-year voting trust, naming himself and four loyal employees as trustees. The trust required the executives to vote as a block and to submit their own shares to the pool. Although the trust had been dissolved by time sale negotiations took place in the 1980s, the author suspects it—combined with the company’s long tradition of sexism—was the root cause of the resistance she encountered from one shareholder, the son-in-law of a trustee.

GMP had nearly 100 stockholders, many of whom were company executives or their descendants. Although the family held 56% of the company shares, they were not a unified group. Mason and her brother, Ray, had been disinherited by their father and thus held fewer shares than their sister, Joy. The three siblings created a trust to support their mother, with two non-family members as trustees, an accomplishment that required “formidable endurance and endless negotiation,” writes Mason, now 84.

Nada, the daughter of Raymond Kaltwasser’s fourth wife, held more shares than did Ray, his biological son, who received his stock after challenging his father’s will in court. “Had [Raymond] died penniless, we would have had only bad memories,” writes Mason, who had had a career as a psychologist before devoting her energies to selling the company. “But in leaving a shackled inheritance, the injuries of childhood were revived with each step we took to free ourselves … it was the emotional significance of his flagrant unfairness that torched each episode.”

Mason weaves a riveting tale that encompasses her painful childhood memories; her combing of company archives to gain insight into what motivated “our multi-talented, authoritarian, mentally unbalanced father”; her torturous but ultimately successful effort to achieve consensus within her family; her camaraderie with her young yet wise adviser, Murray Beach; her growing suspicion that the company was being mismanaged and the lengthy negotiations that preceded the replacement of the longtime president with a turnaround specialist; the frustrating deliberations of the board, which proved to be just as divided as the family, if not more so; the steadfast support of her husband, Ed, who died weeks before the book was published; and, finally, after some 11th-hour glitches, the 1986 merger of GMP with Wozniak Industries Inc.

Mason’s odyssey was winding down just as the field of family business research and consulting was being launched. Today’s practitioners would recognize that GMP’s history incorporates many classic family business flaws: an estate plan that imprisons heirs, an effort to control family members from the grave, longtime employees whose loyalty is considered more important than their competence, a board overflowing with insiders, the use of money as a symbol of love or power, and more.

Though Mason candidly describes her frustration over the years of uncompensated, underappreciated work, her enjoyment of the negotiation process is evident in her writing. She says her professional training helped her muster the fortitude to persist during the many family and board stalemates. “I just knew I had to wait it out—to approach it step by step,” she tells Family Business. “I couldn’t just go crashing in there.”

Mason says didn’t seriously consider liquidating the company. “This was the displaced father-attachment that I had,” she explains. “I wanted it to go to someone who would take care of it.”

Intimate Tyranny is a moving account of a daughter’s journey to healing—one that offers her a new understanding of business and sharpens her psychologist’s insight into human relationships. Sad in many places, droll in others, Mason’s story keeps the reader rooting for the sale to close, and for the participants to finally find peace.

How-to guide focuses on a board’s function

The Balance Point: New Ways Business Owners Can Use Boards
By Cary J. Tutelman and Larry D. Hause
Famille Press, Edina, Minn., 2008
362 pp., $48.95
www.famillepress.com

For family businesses in transition, an effective board of directors can be the factor that determines whether the company succeeds or fails. Yet authors Cary Tutelman and Larry Hause note that many business owners don’t even want to discuss the possibility of forming a board. This resistance, the authors contend, stems from a misunderstanding of what a board is and how it can help.

In their book The Balance Point, Tutelman—a business consultant and owner of CJT Company—and Hause —a consultant to businesses and an attorney with the firm of Fredrikson & Byron—note that a board’s essential function is to balance the business owners’ interests with those of the company’s managers. They prefer the term “balancing” to “governance” because, they contend, the latter “is a foreign word to business owners.”

Tutelman and Hause write that the balancing function ensures “that decisions about such critical matters as dividends, debt and risk tolerance, growth rate, business culture, profit levels, diversification, acquisition and replication, philanthropy, and differentiation are made after considering the values, needs, and goals of the owners and the -business.”

The book addresses the duties and responsibilities of owners, managers and directors. It also offers detailed advice on how to form a board: information to help business owners determine the board’s composition (all insiders, a majority of insiders, a majority of outsiders, or all outsiders) and recruit directors. Also included are chapters on conducting effective board meetings and professional advisers’ responsibilities to business owners.

The Balance Point’s greatest value lies in its step-by-step focus on processes to help private companies resolve their toughest quandaries. Shareholders who jointly develop an owners’ plan and an owners’ manual, Tutelman and Hause suggest, are better able to speak with one voice. A long-term strategic plan and an annual tactical plan developed by company managers and approved by the board can enable management to work out many problems. Case studies—composite examples derived from the authors’ practice—are included.

The authors’ explanations are detailed and comprehensive yet become repetitive as the text progresses. Though helpful, perhaps, for users who prefer to read the chapters out of order or on an as-needed basis, the repetition is off-putting for traditional cover-to-cover readers. Even so, there is a great deal of wisdom to be found here.

The book’s appendices and worksheets guide owners, managers and directors through each activity necessary to fulfill their respective responsibilities and work collaboratively. Among these handy back-of-book offerings are a glossary of commonly used governance terms; elements of an owners’ manual and an owners’ plan; outlines of management’s strategic plan and annual plan; sample formats for a board meeting agenda and meeting minutes; an annual board calendar; suggestions for training new board members; interview questions for prospective board members; and evaluation forms.

“If the balancing is not done effectively,” the authors write, “differences become open conflicts and the balance point becomes the boiling point.” Taking the steps they recommend can help a company perform this tricky balancing act.

Writing his family business story helps an art dealer cope with loss

David David Gallery, a fourth-generation Phila-delphia art business, has endured the premature death of its charismatic second-generation leader and the suicide of a young third-generation member. Carl David, the third-generation leader of the gallery named after his grandfather, says he decided to write his family business story as a way of working through his pain and reaching out to other families touched by suicide and loss.

Bader Field (Nightengale Press, Mequon, Wis., $15.95; www.nightengalepress.com) is named for the former airfield in Atlantic City, N.J., that was the last place the author saw his beloved father. Sam David, a licensed pilot and respected art dealer, died of a heart attack at 58 in 1973, when his son Carl was 24. Subtitled “A Journey of Love, Forgiveness and Acceptance,” the book lays bare Carl’s devastation at the loss of his father, friend and mentor, as well as the family’s feelings of powerlessness and despair after the suicide of Carl’s older brother, Bruce, at age 23 in 1965. Bruce, who did not express much interest in joining the family business, hanged himself from the rafters of the gallery’s fourth floor.

David writes that his father could not bear to enter the fourth floor for years afterward. “Consumed by guilt, he was convinced that Bruce had aimed this final desperate act toward him,” the author writes. “He couldn’t comprehend the situation for its most unpleasant truth, which was simply Bruce’s inability to cope with life.”

Carl David believes his brother’s suicide contributed to his father’s early death. Carl and his other brother, Alan (who later left the business), teamed up with their mother, Flora, to run the growing gallery after the loss of its driving force. The author describes his transformation from a bereaved son who—literally—filled his father’s shoes to a business leader in his own right.

Bader Field also chronicles the family’s many good times: playing pool, sledding, dining in fine restaurants and flying with the high-spirited Sam David; courting his wife, Arlyn; raising his two sons, Shawn and Brett, who now work alongside their parents; and meeting many colorful characters in the art world.

The book “lets people know who we are and what our moral fiber is,” Carl David tells Family Business. Bader Field was written over a period of nearly 25 years, he says. His advice for other family business owners with the urge to write their own stories? “Think about it long and hard, put your emotions into it and take the risk.”