Recently the New York Times reported that the Dolan family (of Knicks, the Rangers and Madison Square Garden Co. fame) has sold part of their family business empire, Cablevision, to Altice, a European media company for $17 billion. Over forty years ago Charles F. Dolan started the business and he later handed the reins over to his son, James.
Rather than creating a succession plan to keep that part of their business in the family, the Dolans chose to let it go. What will you do with your business? Have you prepared for who will take care of your business in the future? Will you split it up like the Dolans did?
There are two considerations to think about when it comes to succession planning – what’s best for the business and what’s best for the family.
The truth is that the relationships that we hold most dear are those of our family (whether or not we hold them fondly or with resentment). Within the context of a family business this fact is quite evident. Regardless of how successful, famous or old the family business, the family still comes first. Understandably the system that has been around the longest has priority.
Gerald Le Van, an attorney explains this concept from the perspective of the changes that have occurred in the business world. The Industrial Revolution created the philosophy that the business world was like a clock, where the goal was maximum industrial productivity at minimum cost, and workers were a collection of individuals or parts of the machine. Today, however, the business world is not envisioned like a clock, but like a rain forest. According to Le Van, “Enterprises are no longer machines, but ecosystems whose fitness to survive is determined by their relationships to other organizational ecosystems in the rain forest world. Enterprises are no longer collections of individuals, but systems.”
Within the world of family business the rain forest model is very effective. Family firms are a system of family members, in-laws, shareholders and stakeholders. These systems interact with vendors, customers, employees, and the commercial community at large. It is a delicate balance to maintain a successful business and a successful family enterprise when the systems are integrated into a family firm. The stress on the system becomes even greater when it is time to develop a plan for the continuity of the business and the family, and a fair apportionment of the wealth. If the family does not have mature and healthy interpersonal relationships, the process of estate planning can be costly, painful and unsuccessful.
When it comes to dealing with intricate and complex relationships your CPA or attorney may not be best the person to help you. This is why many family businesses turn to a psychologist to help them address the soft side of estate planning. A psychologist who’s specialize is family business can help you negotiate a succession plan that is equitable and fair. If you live near Portland, OR/Vancouver, WA please contact my office and schedule an appointment.
If you live elsewhere, consider taking advantage of Remote Education for Entrepreneurs.
