Selling The Family Business Can Be Hell
by
On December 11th, Dave Franzetta, co-author of Changing Places, talked with radio host, Kerry Lutz, on FLN, the Financial Survival Network. This is Part 1 of a 4-part edited version of the radio interview.
This is KERRY LUTZ and you are listening to your Financial Survival Network and you know we are big on small business and big on personal branding, but think if one day you want to establish a business and become successful, you eventually may want to do something else or…retire, God forbid. There is a book, “Changing Places”–a must read if you are ever thinking of exiting your business, or getting close to thinking about it.
With me is David Franzetta. He has a lot of corporate experience, has worked for an international think tank, and knows a lot about solving these problems. Welcome Dave.
DAVID FRANZETTA: Thanks, Kerry. Glad to be with you.
KERRY: We are thrilled to have you with us, because I have been in this situation, needing to do succession and exit planning, when I was a business partner with my brother, and I didn’t want to be. I wanted to be off doing my own thing, but there weren’t any provisions in our documents for doing so, and it became just an issue of our wills being exerted against one another. Finally we did come together and actually sold our company. But it was really painful. What should we have done differently?
DAVID: Well, first of all, the situation you describe is not unusual at all. It happens all the time. We have a client, Nathan, who we’ve been working with for more than two years who is in a very similar predicament. He and his brother William are the sons of a very charismatic, powerful man who built a company–literally from the ground up–starting in the 1940s through to the 70s. He turned the company over to his sons when he was approaching 70 years of age, but he stayed involved as sort of a chairman emeritus. Nate and Will didn’t always agree on where the business should be going, but their father was able to intervene between the two brothers when they disagreed.
But the father died suddenly and Nate and Will were left in a situation where Will wanted to dominate the business and Nate was a different, less aggressive personality type. The challenge that they had was they were 51% – 49% partners in the business and they couldn’t structure a deal that would easily allow one of them to leave the business. The older brother, Nate, had the smaller interest and he really wanted to get out. So what we had to do first was help them with their personal/emotional connection to the business. We worked with them as counselors, to help them understand their personal goals and where they wanted to go in life.
Once they worked through their personal issues it was easier for them to look at the business as a tool, rather than an end in itself. They were able to think about the business as more than a gift from their father; but as an asset that they could use to help achieve the personal goals they had laid out for themselves. They had decided what was important to themselves and to their families, and they made it work. With our help and the help of their financial advisors we structured a buy/sell arrangement that was a win-win for both Nate and Will.
It’s very difficult and painful to acknowledge and deal with the emotional elephant in the room, especially in a family situation. But you can’t make progress until you do.
To be continued…stay tuned for Part 2 in the next post!
Check it out: “Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners”(published by AuthorHouse).
Feedback please to: dfranzetta@gmail.com
LAGUNA NIGUEL, CA – (DAVE FRANZETTA > SIRI > BLOG POST> 01.08.13 > 01:30PM PST