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Fathers and Sons

Business transfers between fathers and sons are known to be among the most difficult to navigate. We do not typically see the same issues in “Mother-daughter”, “Mother-Son” or “Father-Daughter” businesses. Just with those stubborn, bullheaded fathers and sons.

“A society grows great when old men plant trees whose shade they know they shall never sit in.”
(Greek proverb)

I am not going to delve into all of the psychological causes of the Father-Son relationship. If I were qualified I would have dealt better with my own. There are a couple of specific factors at play in an ownership transfer between father and son that we need to be aware of:

  1. An entrepreneur’s business is simultaneously his “baby” and his “mistress.” Everything he has done and the people he has worked with have all been utilized to build that business. He is used to running things his way with absolute power.
  2. The business is an extension of the entrepreneur, a medium for his personal gratification and achievement. If he is concerned about what happens to his business after he passes on ownership, that concern usually takes the form of thinking of the kind of legacy he will leave behind.
  3. Both father and son may have financial issues that they don’t wish to acknowledge or discuss. Dad may feel obligations to other siblings or may have a need to continue to receive cash from the business to fund his retirement. Son may be just starting a family and is feeling pressure to provide the lifestyle he wants for them.

These issues may manifest themselves in behaviors that seem unusual to the son:

  1. Dad becomes concerned about small things. This may be a reaction to his perceived or actual loss of control over the business. He may feel that this is the only way he can exert the control he once had.
  2. Dad may oppose strategic actions that the son explores. The father may feel that the son is not giving him credit for his deep and hard-won experience in building the business to where it is today. The son may have worked elsewhere for a significant time before returning to the business and has new ideas for how to position the business for the future that don’t align with how the business was formed.
  3. The father may have been a star whose imagination, creativity, and drive are impossible to duplicate. He may have been a charismatic figure with whom employees and even the public identified. But now the organization has grown beyond one man’s capacity to control it effectively. It needs a different kind of management and leadership to allow it to continue to thrive and to attract the type of people that would chafe under the style of the founder.

What To Do

There are measures that can be implemented to deal with this situation effectively:

  1. Face it head-on. This particular problem tends to get swept under the rug until it unexpectedly explodes – often at an inopportune time for the business. It is critical that the father and son sit down and acknowledge what is going on and how both are feeling. Several approaches may work well:
    • The son may need to tell his father that he recognizes how important it is to the father to run his own business, but it is just as important for them to have the opportunity to run things differently.
    • The father may need to acknowledge that he has been a “one-man-show” and that his son’s ideas about partnering with other organizations or delegating to employees have merit in a larger organization.
    • Both may need to come to agreement to withhold judgement on the others ideas until they have had time to carefully consider them. Perhaps they need to implement a procedure where each defends the others idea to develop a better understanding and appreciation of the opposite position.
  2. Use a trusted intermediary. These discussions can be emotional and difficult to keep on track. They can often veer into something that neither side anticipated or wanted and once they do the parties may retreat to their corners. A well-trained third party who knows both father and son can be a neutral listener and act as mediator, talking to each individually about their issues, challenging thought processes and synthesizing solutions.
  3. Document the Relationship. A key mistake that is often made in transitioning ownership within a family is that they assume they can get along and don’t need to bother with pesky documents. This can lead to huge misunderstandings, legal and tax problems. This is a business transaction – treat it as such. I had an attorney friend who once told me “if it is good enough to say, it is good enough to put into writing.”

I have managed businesses transitioning between fathers and sons and advised a number of father-son business transitions. I am confident that you can survive this tricky transition. It requires patience, understanding, solid advice and love – all things that you can martial if you want your transition to work. Fathers and sons can work closely together to create great businesses and rewarding relationships.