Leprino Foods makes a lot of cheese. All kinds of cheese, but mostly mozzarella. If you are currently holding a Hot Pocket or have recently popped a pizza in the microwave, chances are you’re eating Leprino cheese. The Denver-based family business has supplied pizza makers like Pizza Hut with a variety of cheeses and cheese toppings for over 70 years. The company controls in the neighborhood of 85% of the pizza cheese market. It’s a multibillion-dollar company that holds its ground as a Colorado institution with a colorful past and, frankly, a colorful present.
Late last year, the company’s 85-year-old chairman and CEO Jim Leprino found himself head-to-head in a court battle with two of his nieces, Mary and Nancy. The two alleged their uncle and cousins misled them about the company’s financials and withheld disclosures (and money) that they are entitled to receive. It was a nasty headline-grabber of a trial. Money. Family. Control. Succession. At the conclusion of the absolutely bonkers nine-day trial, the jury ruled in favor of Jim Leprino and Leprino Foods. But hoo-boy, the whole thing just … I don’t know what to even call it other than total exposure of the underbelly of a complex, multigenerational, multibillion-dollar cheese dynasty.
Throughout the trial, the big cheese himself — Jim Leprino — was clear in his desire to see his two daughters succeed him as the next, um, cheese heads, so to speak. Nieces need not apply. At any rate, the whole mess really put a fine point on the touchy topic of succession.
No matter the company size, revenue or sector, family business succession is never easy, and no two successions are the same. But why is it so hard? Is it fear? Mortality? Money? Power?
“There are a lot of reasons succession is hard,” explains Dennis Jaffe, senior research fellow at BanyanGlobal, a family business consulting firm. “Of course, it’s about one’s ultimate demise. Leaders want to hang on and sometimes think nobody else can possibly do a job better. But letting go also means telling your family about a potentially upsetting decision. That’s why decision avoidance is the most comfortable strategy.”
Chris Yount, author of Family Business magazine’s Boards column, agrees and adds, “Succession is hard in any business – family or non-family. The outgoing CEO might not admit this out loud, but secretly they may think they are the smartest person in the room and the only person with the insight to lead this company to greatness. Any candidate that walks in the door is by definition not them and ipso facto not as good as them. A hard hurdle to clear.”
But when it comes to family business specifically, succession becomes much more complex, says Yount. “Family dynamics create decades of emotions. Sometimes different branches of the family want more power. Toss in entitlement and birthright, and successions can be pretty dramatic.”
No matter how big or small your family business is, succession is a challenge. When emotions run high, things get messy. The best strategy is to have a plan.