Family Business Case Study
What Would You Suggest?
Our Readers Provide Solutions!
Study: Two Brothers**
Joe Francis, 65, is faced with a difficult dilemma. The founder
of a successful rental company, Francis Footwear, he has four
children, Mary, age 42; Joe, Jr 37; Robert, 36; and Irene,
age 31. Joe and his wife Kathleen have been married 45 years.
Joe, Jr. had graduated from business school 10 years ago;
he was employed by a large 'down town' firm for 6 years, at
which point he decided that he was bored and after having
joined an Internet start up that went bust, he wanted to return
to the family business. He approached his father with a proposition.
"It's clear that we need new blood in this company. You
know I'm capable. I have an MBA and lots of outside business
experience. Let's make a deal; I'll come back in, but only
as president and a plan to buy you out. This would free you
up to do what you want. Irene and Mary have wanted to buy
larger homes for their children, your grandchildren, nearer
you, and Mom wants you to retire so you can finally have some
time together before you get too old. Rob is loyal but you
know he is not a leader."
Joe considered this an attractive offer and discussed it
with Robert who reacted quickly and heatedly. "Never!
I've worked too hard in this company! I came to work for you
12 years ago when Joe, Jr. refused. At that time, you promised
me a future here. I can't believe that you're even thinking
Joe, Sr. thinks his older son's offer is quite appealing.
And, although he knows that Joe, Jr. is very bright and creative,
he worries that he gets bored easily and has a tendency to
jump from one thing to another. Nevertheless, he thinks, his
older son really seems to have matured during the last few
years. And the company's profits have been declining. Moreover,
although Robert has been loyal to his father and the company,
he may not be the dynamic leader needed to face a future where
continued success may be determined by competition and other
factors beyond his control.
What do you think Joe, Sr. should do next?
What do you recommend for the business? For the family?
What will happen if Joe, Sr. does nothing?
How would you choose the successor?
The following are suggestions for Joe and his family business,
from our readers:
David Kellogg, of Kellogg Associates, suggests:
This succession challenge must be dealt with carefully. If
Joe Jr. is immediately given the President's position, it
is likely that Robert will leave the company. In addition,
there are indications that Joe Jr. may not be the best long
term choice as a successor. If Joe Jr. were to be given the
Presidency, the personal family dynamics would also be severely
and permanently damaged.
I recommend that Joe Sr. be brought in to the company, but
not with a guarantee that he will be President. He has not
worked in the business, and has a lot to learn from his father,
brother and others in the business. He should be rotated through
key areas of the company, such as sales, operations, finance,
etc. This will give him a chance to learn the business (with
less risk that he will screw it up due to lack of experience),
and also give Joe Sr. a chance to evaluate both brothers'
It is also critical that Joe Sr. hire a consultant who can
help him through this process. This consultant would assist
Joe Sr. in communicating with the two brothers (and taking
some of the heat for decisions made). The consultant would
also help Joe Sr. to evaluate the two brothers. It may be
that Robert has strong skills, but he has not been able to
show his leadership capabilities because his father intimidates
him in some way. An outside consultant could work with Joe
Sr. with this. The consultant would help Joe Sr. to make the
decision about who will be his successor.
Kellogg Associates, LLC
Banking and Financing Solutions
Kristen Armstrong, a Consulting Psychologist from
Sonoma CA, recommends:
If Joe, Sr. does nothing, both sons will be very frustrated,
hurt and angry with their dad, and the likelihood of the family
business surviving as such will be greatly diminished. Unless,
of course, one of the sons were to decide that too much was
a stake here, that they're all liable to lose if they don't
come together on this, and reach out to his brother to begin
to devise a workable succession solutions. Once/if they were
able to dod this (unlikely without an advisor's help), they
could approach Joe Sr. with their ideas and begin a larger
If Joe, Sr. acts, he'd do best to obtain the services of
a family business advisor to help them have the difficult
conversations they all need. If he makes the decision unilaterally,
the business is likely to blow up, and the family will, also.
If, however, he sets up family meetings where they are helped
to hear each other others' needs and wants, and each one's
aspirations for the business and family, they will be on their
way to devising a much more inclusive, creative solution,
keeping both the family and the business intact.
The successor might then be chosen via family discussions,
perhaps aided by some skill/interests, and leadership competencies
assessments by a consultant. Various options should be considered
with respect to their legal and financial ramifications as
well as the desires of the family members. Eventually, Joe,
Sr. and his wife Kathleen will have to make the decision,
but it will be a very much more informed one, and one that
is much more likely to be welcomed by all, as they've been
a part of its development.
E mail: KrisArmstong@cs.com
Thank you to our readers for their responses!
* Case is disguised and co-written by Jane
Hilburt-Davis and Richard Berner, Esq. for the Second Annual
Multifamily Office Forum, New York, Dec. 1, 2003.
** Submitted responses will be published to
the Key Resources web site; Key Resources reserves the right
to edit submissions for content and/or clarity. Not all submissions
will necessarily be published, depending on space limitations.