Turning 30, Paul felt it was time to leave his family’s third-generation real estate business, even though it was experiencing a meteoric rise. His father and uncle had formed the business that was spawning other investment businesses, all of which were paying huge dividends.
What follows is an all-too-familiar story of what happens when one family member’s sudden departure turns what were minor cracks in a seemingly very solid family into a wide, gaping chasm. And it doesn’t have to be that way.
If you advise family businesses, here are ways to spot and mend these cracks before they bring down the entire business.
A culture of competition
This family’s ultra-competitive and shrewd business practices that won them deals is part of their DNA, stemming from the first generation. The mood among the rising generation was “win at all costs.” Success was measured by the size of the deal, which resulted in Paul having a competitive relationship, and increasing resentment, with his cousins and siblings. He was unwilling to tolerate the situation any longer.
By outward appearances, this was a tight-knit family, well-regarded in the community for their philanthropy and respected for how well they worked together as a family. They were hard-working, modest and committed to the success of the company. The founding brothers had a solid estate and business succession plan in place to transition the business to the fourth generation. Having never experienced discord within the family in previous transitions, the brothers were confident their values were deeply entwined in the fabric of the family. They trusted that the estate and succession plans would manage the relationships.