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Family Dysfunction in the Family Business

Harold James describes the disfunction in the Murdoch empire. I’ve posted on the break down of the Robert Schuller family organization at the Crystal Cathedral.

Family businesses can be great, but planning is needed to secure a thriving business through the next generation. One problem with family businesses is that all the craziness that happens in a family spills out to the business.

Many years back I had a meeting with two brothers (in their 50s) who ran a very successful company. We were to meet also with their mother who owned 100% of the business (following the husband/father’s death). The objective of the meeting was to plan the most tax effective way to transfer shares from mother to sons. Well, mother didn’t show up for the meeting. The sons called her. She said she wouldn’t attend or participate in the planning. And she gave her reason: One of the sons promised to mow her lawn and he hired a gardener to do it instead and she felt insulted. Dysfunctional families can mean dysfunctional family businesses. The solution is a succession plan including a buy-sell agreement and estate planning including living trusts and irrevocable gift trusts. With good planning the business can thrive even if the family remains dysfunctional.


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