I come from a family with a successful track record of business achievements that span most of the last century. My grandfather, Charles, and my father, Clark both built an enviable track record in the construction and real estate industries. Because of their reputation, integrity and excellence became synonymous with our company name: The Bentall Group.
Today, across North America, Europe, and Asia, real estate professionals work under a slightly different name: “BentallGreenOak” However, in some ways, they continue to build on the legacy that our family created. As of December 2020, this company had over $55 billion in assets under management. Sadly, nobody in our family is employed in this enterprise, nor do they share own any shares.
How did this happen? There are many theories, but I think three things which contributed to the situation are worth mentioning.
First of all, my own impatience and youthful exuberance played a significant part. If I had not been so critical of others and seeking to change everything overnight, the story of our family enterprise might have had a different ending. Unfortunately, as a successor I struggled to submit to organizational authority. This is why I now passionately encourage all “would be” successors to learn from my experience. Be patient! If you are deserving, your chance to lead will likely come.
Secondly, my father’s generation focused on “hard issues“ (sales, profits, taxes, etc.). As a result, and as Harvard professor, Bi Barnes, often observed with families in business, our family let the “hard drive out the soft“. In creating our plans and getting technical advice from our professional advisors for our family business, the long term implications and the relational impact of many decisions were not considered. Had we been alert to the need to invest in family communications, as well as appropriate governance structures, we could have been successful in charting a different course.
Thirdly, we had good advice. In fact, we had some of the best professional advisors that money could buy, and for the most part, they served us well. However, unfortunately, none of our advisors warned us of the pending relational disaster that lay ahead. Had they spoken up, someone might have been able to prevent the eventual unraveling of our family enterprise.
Let me illustrate:
- We had good legal advice. But, our legal advisors did not notice, nor did they speak up about the fact that in our shareholders’ agreement there was no conflict resolution mechanism. Consequently, my father and his brothers found themselves in an argument after working together for 40 years; and when the documents were examined, they found “no way out of the room“. This exasperated matters for the family. Furthermore, no one was realized the dangers of the inherently unstable shareholding structure, which eventually collapsed, bringing an end to the family’s participation in the company.
- Our tax advice was also excellent. However, no-one discussed the loss of control that could occur as a result of some proposed share transfers. In addition, the estate freeze, which was done many years ago, saved on taxes but also contributed to unintended consequences, when the primary wealth creator in our family faced the humiliation of being cash starved when control of the company slipped into other people’s hands.
- We also had great corporate management team, and capable business leaders. However, no one in management had the wisdom or courage to speak up, when they might have prevented the cataclysmic explosion which was coming. Certainly they could see the opposing strategic views and life goals of some of the shareholders. Perhaps they could have sounded the alarm sooner?
So, what can be done for other family enterprises who may face challenges like ours in the future?
BE PATIENT! Successors would be wise to be respectful and patient, while waiting for their turn to lead. This would take a lot of stress out of the family system.
LISTEN UP! Business families would do well to request input from their advisors on the non-technical implications of their plans. They may be able to foresee potential problems ahead of time.
SPEAK UP! Professional advisors have a unique perspective. As a result, they should have the courage to speak up when they spot issues which their client families may not be aware of. A word of warning offered by a trusted advisor could make all the difference.
These three actions would each have the potential to assist other entrepreneurs and their families to enjoy a better end result than we had in our family. So, if you are a successor, be patient; If you are an owner, listen up; and if you are an advisor, speak up!
You owe it to yourself, your family, and your clients.
David’s latest book, Dear Younger Me: Wisdom for Family Enterprise Successors, has just been released. You can order a signed copy by simply clicking here.