To Keep It In The Family: Family-Owned Businesses

We have all heard stories of business owners who intend for their children to carry forward their mission, to take over their business when they retire or die. The business founder may even dream of generations of family members leading the business to great heights and achievements. The dream of creating a legacy business is not new. The desire to have your children at the helm is not new. Nor is it new that some children have no interest in the business. It is also not new or surprising that the parent, the very owner of the business, has made few or no provisions for the future control and ownership of the family enterprise.

At the Centre for Mediation and Dispute Resolution, we receive many inquiries from children who wish to take the mantle, to carry the business forward. Yet they do not know how to plan for their future without an agreement with their parent. They often tell a similar story:

• There are no written directives, contractual agreements, for succession of ownership
• At present they may have no ownership interest, despite some of whom have worked in the business for years with promises of taking over
• There are siblings who do not want to work in the business but recognize that there is a value to the enterprise for which they may or may not want compensation
• Their parent does not want to engage in constructive conversations on how to deal with his/her “stepping down”
• Their own family is pressing them to make choices—sort of “do or die” edits
• There is another parent, who is not involved in the business, but is pressuring the “working- owner parent” in ways that may or may not be apparent to the child
• The child may believe that the business is at a critical juncture and needs to adapt to changing circumstances
• The child’s present compensation is inadequate or needs to include provisions for increases

And so the list of commonalities grows. These are the children who are aligned with their parent; indeed, they are committed to the generational growth and development of the family business. Yet many appear to feel that they have been blindsided, led astray by a parent who said they would be his/her successor only to find, as their parent reaches or approaches retirement age, that there are no plans or provisions for the succession to actually take place.

In a confidential and safe environment, mediation offers a vehicle to address the hard questions while protecting familial relationships. As a problem-solving approach, mediation strives to identify the questions to be asked and the information needed to generate ideas and solutions. The mediator’s role is to facilitate the exchange of ideas and to foster the search for solutions. Family businesses are not just about “money.” Familiar relationships, inside and outside the workings of the business, need to be safe-guarded and perhaps even enhanced.