How to Keep Your Family Business from Featuring on Shows like the Cold Case Files...

The U-Haul company was founded by Leonard Shoen who had thirteen children. Following his death, a vicious power struggle over the company erupted primarily between Samuel W. Shoen (the former president) and Edward “Joe” Shoen (the chairman). It lasted for decades and involved physical altercations, libelous accusations, lawsuits, corporate maneuvering and family drama allegedly including the murder of Samuel W. Shoen’s wife… Eventually, Edward “Joe” Shoen managed to consolidate his control of the company, and the disputes settled down into seething sibling antagonism and mutual hatred.

This conflagration could have been avoided...

Not an optimal outcome and not what most of us want for our families.

This whole divisive drama could potentially have been avoided with a clear and straightforward plan that involved the following elements:

1.      Start the Process Early: Begin planning your business and estate transition early on and normalize the transition as a process (and not an unexpected, sudden, traumatic event…);

2.      Foster Open Communication: The holding of regular family meetings where hopes, fears and goals are discussed openly cannot be emphasized enough;

If it's hidden, it can't be trusted.

3.      Establish Clear Governance: Create formal business or estate structures including agreements, trusts, business documentation, advisory boards and shareholder agreements to separate “family issues” from “business decisions;”

4.      Define Roles & Responsibilities Directly: Document job descriptions, who reports to whom, and specifically decision-making authority to prevent overlap and resentment;

5.      Ensure Fairness & Transparency: Be open about compensation, ownership, and leadership opportunities and develop all potential successors equally to avoid claims of favoritism;

6.      Develop Leaders & Leadership Skills: Provide training, education, mentorship and expose different parts of the business to all potential successors and not just the “anointed” heir;

7.      Don’t Be Afraid to Use Neutral Third Parties: Bring in a facilitator, coach or advisor for difficult conversations to manage emotions and to keep meetings productive (and be prepared to designate authority to third parties if successors are not able to manage their mental states);

8.      CREATE A FORMAL PLAN: It is Critical to document roles, timelines, ownership transfers and a conflict resolution process to guide the transition and to manage family expectations (and failure to do this WILL absolutely result in a disastrous, chaotic, contentious mess like the U-Haul transition…);

Manage expectations directly and while there's still time...

9.      Focus on Business Goals: Keep discussions centered on the long-term health of the business and avoid personal preferences and “empire building;”

10.  Lastly, Address Finances & Legalities: Get (regularly updated) independent valuations, tax opinions, business filings and estate planning to ensure the plan is legally sound and also financially fair to your successors.

In conclusion, by following these guidelines, a structured, transparent and fair process has a high likelihood of success of a harmonious transition with limited space for family drama and conflict. Don’t go it alone… involve professionals who can guide you through the process and keep the plan updated, effective and successful.

Curry Andrews, Attorney