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Pass the Throne, Wisely

By Paul Karofsky I first met Glen at a mutual friend's home this Thanksgiving, when he shared an oft-recounted family business story. He told me how his father suffered a debilitating stroke 40 years ago, forcing Glen, then 19, to take over the business to support his family. While he built the family shop into one of the Northeast's largest and most profitable appliance stores, Glen recounted his resentment at having sacrificed his youth.

Now that he was approaching his 60th birthday, Glen told me he wanted to slow down and travel with his second wife. He explained that he and his first wife were divorced when Sarah, their only child, was young, and that mother and daughter had moved to the West Coast. Glen expressed regret that he saw so little of Sarah when she was growing up. Sarah, now a college senior, was visiting for a few days, and during a father-daughter dinner, "she vented her frustration about growing up in a single-parent household," Glen recalled. "I acknowledged that it must have been hard for her."

PATERNAL PITCH. The plot thickened when Glen evoked that infamous plea -- he told Sarah how he had a lifelong dream that the business would pass on to the next generation, that all his hard work wouldn't be for naught. Glen told Sarah she had the perfect personality and education, that she'd make great money, have a company car and all the perks -- more than she could get anywhere else -- and ultimately buy him out at highly favorable terms. Glen asked for my opinion, and I told him I wanted to hear Sarah's side first.

So often, whether on the golf course, at dinner with new friends, or from the abutting seat on an airplane, whenever someone learns that I consult to family businesses the stories pour forth and the search for guidance beckons. Frequently in situations like Glen and Sarah's, I find that the younger family member is actually the more perceptive one. In my dialogue with Sarah, she said she was simply stunned, and while she appreciated her father's offer, she wisely told him she needed time to reflect.

What makes this unique area of entrepreneurship so complex is that the value systems and relationships within families and businesses are entirely different. Like many a child of a divorced parent, where the early years' relationship was inadequate, the separated parent wants to use the family business as the ultimate magnet. In Sarah's words, Glen was trying "to be the father he had never been." It's understandable that such an offer is tempting, both personally and professionally.

TREAD WITH CARE. When this scenario occurs, I encourage a multistep process that begins with family members getting to know both themselves and one another a little better. Often, it's also important to achieve some resolution when there has been a complex past -- even if that means agreeing to disagree. I suggested that Glen review his own entry into the business, lest a resentful history repeat itself, and I urged Sarah to explore a whole range of career options, with a list of pros and cons, risks and rewards.

Parents and children also need to examine goals for the future on personal, family, and business levels. Some old-fashioned strategic planning is even in order -- a notorious oversight in many family businesses. After all, unless you know where the business is headed, how do you know what knowledge, skill, and experience is required of the next leader to get it there?

Having the right personality and an attractive academic background might count for something, but the senior generation needs to consider additional "entry criteria," such as outside work experience. It's also far too seldom that family members examine "exit criteria." What happens if Sarah enters the business and, for whatever reason, the situation doesn't work out? Exiting the business should not mean exiting the family.

And what about key managers, suppliers, customers, and that friendly banker? It's vital that this decision is not only right for family members but is in the best interests of the business and its employees as well.

TALKING IT OUT. For Glen and Sarah, and so many families like theirs, there's no substitute for solid reflection and one-to-one dialogue. A probing inquiry can lead to greater assurance that shared goals and expectations are met. One thing is guaranteed: Simply working together won't improve a family relationship.

In many cases, the opposite can take place. So just as Sarah needs to decide whether this is the right move for her, Glen needs to be sure that he's truly presenting his daughter with an opportunity -- not an obligation. Paul Karofsky is executive director emeritus of Northeastern University's Center for Family Business and a member of the Family Firm Institute. A former third-generation family-business owner, he's currently the principal of Transition Consulting Group in Boston, where he advises families, businesses, and educational organizations

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