By Maureen T. Mckay
In an earlier article in our series, Murray Gottheil quoted these words from Leo Tolstoy: “all happy families are alike; each unhappy family is unhappy in its own way.”
The sad truth is that there is unhappiness in all families, and many families do not like to share their secrets. Working with these families on business succession requires professionals to be trusted, and, as Arthur Ashe said, “Trust has to be earned, and should come only after the passage of time.”
For those lawyers who like to get the deal closed quickly and move on, my best advice is to stay with real estate transactions, mergers, and acquisitions. When it comes to business succession, move out of the way and let those of us who value empathy over EBITDA, and communication over closing certificates, take our sweet time and get it done right.
There is a story about a member of a particular ethnic group who was being sworn in as the first female President. A gentleman sitting next to the new President’s mother said to her, “you must be very proud.” The woman responded: “I am so very proud. And even better, her brother is a doctor.”
The fact is that every family has its own values, often influenced by their cultural background, and those values must be addressed when planning for succession.
A family who I worked with functioned on the traditional value system learned in the Old Country, which dictated that the oldest son should be appointed the leader of the business. The problem? The youngest daughter was a whole lot more capable, and rather resentful of having been forced to play second fiddle to Dumbo, watching him take credit for her ideas. These two were not going to make great business partners.
In another case, Dad wanted Number One Son to take over a substantial business. Mom had doubts about the ability of Number One Son to do it and preferred to sell the business. Daughter was not enamoured with the idea of her brother taking over the company, but she had cut back on her involvement with the company. Nonetheless, she made sure that her views were known from the sidelines.
The point? No two situations are alike. There can be a lot of emotional baggage clouding up what one would think would be simple business issues. Just a couple of stories illustrate that you cannot overlay a simple tax-planning template on whatever brand of crazy permeates a particular family business. There is no “Practical Law” precedent to use in these situations. It is not just about the dollars. It is about the people who use the dollars and also need to sit around a holiday table. And smile. And be grateful.
Helping families work through all of this can be challenging and rewarding. Lawyers who do this work need to be patient and serious.
Don’t send in the clowns.
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc