Learn from an author's experience
Leaving a Legacy: Navigating Family Business Succession
By David C. Bentall
Castle Quay Books, 2012; 336 pp., $34.95
David Bentall was once the heir apparent at The Bentall Group, a Western Canadian enterprise whose businesses included construction, engineering, leasing and property management, and industrial parks and shopping centers. By 1988, the company had a $500 million portfolio of assets and five regional offices; it was voted one of the 100 best companies to work for in Canada.
Then the wheels fell off. Around the time that David Bentall turned 33, long-simmering tensions erupted among his father and uncles, the second-generation owners of the business. Ultimately, the family enterprise was divided; David's father, Clark, purchased the construction operation, Dominion Construction Co. Ltd., and Clark's younger brother Bob assumed control of the real estate and development side of the business. In the process, David Bentall was ousted from his role as vice president of The Bentall Group.
Clark Bentall never reconciled with Bob or his elder brother, Howard. “It was tragic to watch as our family, once characterized by mutual respect, deteriorated into a fractured wasteland of broken relationships,” David Bentall writes in Leaving a Legacy. But by acquiring Dominion, Clark's branch of the family “were given a second chance at getting succession right,” the author states.
David Bentall describes in his new book how he and his third-generation siblings developed ownership and governance structures that guided them as co-owners of Dominion, where he served as president and CEO for seven years. Later, a sister and her husband bought out David and another sister, thus ending the author's involvement with his family business.
In the book, Bentall, now a family business adviser and executive coach, candidly shares his family's story—what they did wrong and what they did right—to illustrate key points about family business best practices.
The author explains that his grandfather, Charles Bentall, had named Clark as president of the family business and Bob as the vice president while recovering from a heart attack at age 69. Howard, Charles's eldest son, was a minister and did not work in the family business; nonetheless, all three sons were given equal ownership shares. Though he had stepped down from leadership of the company, Charles Bentall lived for another 20 years, his grandson notes. “If Granddad had been able to anticipate some of the challenges that lay ahead,” David Bentall writes, “he might have used this time to help his boys develop agreement on a shared vision for the future.”
The three brothers had no model of collaborative leadership and no procedures for breaking deadlocks. Other factors contributed to the tensions, as well, Bentall notes. The company's board existed only on paper, with no formal meetings and no independent members.
Bentall explains that his uncle Bob was “forced to be subordinate to my dad for 20 years,” and his uncle Howard, who didn't work in the business, “felt out of the loop.”
“Sadly,” the author reflects, “my dad was unaware of how much his brothers were struggling and how deeply rooted these feelings were. In fact, he was naïve to the fact that he contributed greatly to their angst…. Had they realized the need to invest in family communications and long-term family harmony, they might have been able to avoid the further deterioration in relationships that ensued.”
A non-family executive relentlessly teased Bob, but Clark never told him to stop, David Bentall writes. “The fact that he didn't likely undermined Bob's faith in Dad's leadership,” the author points out.
The story of The Bentall Group's breakup is painful to read. Though David Bentall, unfortunately, doesn't offer any other family members' perspectives, he is objective in describing what went wrong, and why.
In the 1970s, after a couple of ownership reorganizations (one of which occurred purely for tax-planning purposes), Clark owned slightly less than 32%, Howard and Bob owned 25.01% each. “For the next decade, no one paid any attention to the fact that they now had effective control of the company,” David Bentall notes.
In the mid-'70s, Clark Bentall became non-executive chair, and Bob was named president and CEO. But Clark continued to act as if he were the company's ultimate authority. “As president and CEO, Bob had tried for almost ten years to obtain Dad's support for the creation of a shared vision and a strategic plan for the future,” Bentall writes. “However, Dad was unable to adapt to this new way of approaching business.”
Bentall explains that Bob wanted formal job descriptions that outlined clear lines of authority. “Dad, the entrepreneur, didn't like to be constrained by such practices, which he viewed as a waste of time and energy.”
The author frankly explains his father's role in the succession debacle, yet throughout the book he describes his dad with love, respect and pride. “I loved my dad for many reasons, but his commitment to acting in a principled way—even in the midst of pain and betrayal—was truly inspiring,” David Bentall writes. “He was a man of principle and always sought to take the high road.”
Bentall unflinchingly describes his own contribution to the rift between the brothers. “Unfortunately, once I joined the company, I often disagreed with [Bob's] business strategy (and almost everything else),” David Bentall writes. “Instead of respecting his experience and his senior position in the company, I was openly critical of him (both to his face and behind his back). I now realize that my critical spirit and insubordination combined to give my uncle ample justification to eventually want to remove me from the company.”
The situation came to a head when Bob and Clark disagreed over the appointment of a new vice president of real estate. Bob, Howard and a non-family executive who owned some stock transferred their shares into a holding company that would own 68% of the family enterprise. A facilitator who had a vested interest in the outcome convened separate meetings with the family branches that culminated in the splitoff of the flagship construction company, Dominion Construction.
Bob and Howard were not interested in discussing the sale of Dominion “as brothers”; they told Clark to hire a lawyer and accountant and make a formal offer. This prompted Clark to convene a meeting of his wife, his children and the children's spouses. “To add tension to the situation, none of us had ever been included in discussions of this nature or magnitude before,” David Bentall notes.
“As a family, we didn't have either appropriate structures or fair processes,” the author states. “Nor did we have a road map for developing as good owners. We were actually offered no training or orientation at all. However, having seen G2 fail badly in their relationships as co-owners, our generation worked hard to do things differently.”
Bentall's book details the negotiations and planning that led to his successful third-generation partnership with two of his three siblings between 1988 and 1998. During that decade, according to the author, the company's annual sales grew from $150 million to slightly less than $300 million; the business was profitable most years.
Bentall also discusses his quest for a meaningful career after he left Dominion. His book is replete with references to his hobbies, faith, philanthropic activities and relationships with his wife and children.
In Leaving a Legacy, the author cites the work of several noted family business advisers and researchers; he also offers insights from some of his clients. In one section of the book, he provides samples of several key governance documents, including a family constitution (from Carlo Inc., a fifth-generation real estate company based in Albuquerque), a family employment policy (from an anonymous family), an agenda for an initial family meeting and a director recruitment strategy. A separate section consists of short profiles of 23 business families.
Readers can learn a great deal from the Bentall family's experience, shared so eloquently and generously by a family member who was present on the front line. “[I]n our family's experience,” David Bentall notes, “matters became much worse simply because we were afraid to talk about them.”
Finding the courage to walk away
Trapped in the Family Business:
A Practical Guide to Uncovering and Managing This Hidden Dilemma
By Michael A. Klein
MK Insights LLC, 2012; 119 pp., $22
www.trappedinthefamilybusiness.com
If you're unhappily employed in your family company, you're not alone. Author Michael Klein notes in this slim, easily readable volume that while financial “golden handcuffs” can keep an executive from leaving a company, family business members often feel constrained by “emotional handcuffs” related to guilt, obligation or loyalty.
Klein, a Massachusetts consultant who holds a doctorate in clinical psychology, notes in his introduction that he conducted “over 30 interviews with family business members, consultants and writers” while researching the book. He quotes from many of these interviews throughout the text, though he doesn't name the family members he queried.
The author stresses that most of his interviewees reported feeling emotionally trapped. “Interestingly,” he writes, “very few mentioned anything about being financially trapped, despite the massive downturn in the global economy.”
The first part of the book provides insight into how this situation develops and reassurance that it is widespread. Klein points out that many entrepreneurs start businesses with the goal of passing them on to their children. He cleverly likens such “arranged occupations” to arranged marriages.
Sometimes pride keeps a family member yoked to the business, Klein notes. Family employees soldier on to prove to relatives that they can do the job, or out of fear that the business might fare very nicely without them.
Inertia is a common factor. Why deal with the anxiety of a job search when one can simply stay put? “Incredibly, for some, there can even be great comfort in family business quarrels and disagreements if this is what is most familiar,” psychologist Klein explains.
The book's later chapters address what to do once the problem has been identified. This is what anyone drawn to a book titled Trapped in the Family Business hopes to find. Klein acknowledges that this part of his book is open-ended. “The goal of this section is not to provide a systematic guide for what to do for every situation,” he writes. “Rather, it is to create a very broad set of options to consider what might be possible.”
The author bluntly lists a trapped family member's three alternatives: Change your perspective on the job, change the job itself, or exit. All three involve frank discussions with others.
Klein advocates consulting an objective third party before broaching the subject with family members. When making your case to relatives, he advises, “be very clear about what you hope to accomplish through such a conversation and have an idea of how to start it and how to end it.”
The book doesn't serve up a ready-made solution, but it can help guide your thinking on how you might escape your trap.
Copyright 2012 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.