Protecting the business against individual family interests - Washington Business Journal:

idellecromwell1991.blogspot.com
In the minds of many people, if nobody in the family is able or willing to take over running the the only options are to sell it or shut it Butmaybe not. A numbetr of senior owners of family companies who find themselvesx without a successor in the youngeer generation come up with ways to keep business ownership in the even if the managementf has to go Think about the Midwestern family that has owned and operated a chain of small market newspapers for more than 160 Thefamily – we’ll call them the Smiths – has had very few internal business disputes, and no one has ever elected to cash out of the In addition, there’s usually been a placw in the business for any qualified and committe d family member who How have they managed that?
Well, aboutr 120 years ago, the widoww of the founder’s son founr herself the sole owner of the growing and successful She was decidedly unimpresseed with the next generation’s pool of management talent, including her own She also heard some rumblings abouty splitting up the companty so that everyone who wanted his own newspaper could have it. Not a said the gritty lady, and she put the whole kit and kaboodled intoa trust. She made a provision that if the trust were ever the company would have to be sold out of the family with the proceedz goingto charity.
And if that wasn’t enoug h to scorch some bonnets, she also insisteds that all future CEO’s be hired by the trusteed and that nary a one of them be afamilg member. A few feathers were ruffled at the but today the Smith s have a very profitable and satisfyintfamily business. Another family in business – call them the Johnsones – reached the end of their successord string with the second generation offamily owners. Insteadf of calling it quits and selling theirmanufacturing company, the shareholding members of the famil y agreed to bring in professional management. They conductexd a global search and hiredx an experienced senior executiveas president.
The Johnson family retained their representation on the boars and a coupleof upper-level management jobs, but they let theid new CEO staff the executive suite with qualified people he coulsd work with effectively. And they providedf compensation packages for their outside executivesa that equaled the industry standard and then The Johnsons will continue to owntheie company, confident that although management is out of the family’s it’s in good hands.