Sibling rivalry and business succession
Maintaining family unity within a family-run enterprise
At 68, Colin Patterson* is ready to put in place a succession plan for his real estate and construction company, which he founded almost 40 years ago. With four children, two of whom are substantially involved in the business, Colin must now clearly define who will succeed him and what the ownership structure should look like. But one of the key challenges is navigating the divergent views of his children Natalie (44), Robin (42), Zoe (41) and John (35).
Still fully motivated, healthy and able to run the company, Colin was initially resistant to the idea of handing over the reins. However, he's inherently wise enough to understand that strategic succession planning is vital to ensure the future success of the company. As a general rule, an agreed-upon succession and governance plan can help a family manage their wealth, define roles inside and outside the family business, set boundaries for all family members and deal with competing and interrelated interests.
The dilemma
The core challenge for the Patterson family is navigating the divergent views and business vision of siblings Natalie and John – tension that has spilled over into family relations. Natalie, who joined the company after completing her business degree and was instrumental in helping her father expand the business, feels strongly that she be the chosen business successor. While Natalie wants to focus on scaling the business within the mass-market segment, John is adamant about focusing on developing more quality, upscale projects and ensuring the company is recognized primarily for its design excellence and innovation.
Breaking with his typically calm demeanour, Colin along with his wife Gillian, 66, are finding the situation stressful.
What are some options for Colin and Gillian to move beyond this impasse and implement an effective long-term plan that maintains family unity, addresses each individual’s preferences and best interests, and allows the family enterprise to survive beyond the second generation?
The Richardson Wealth Private Family Office says family situations like the Patterson’s, which share ownership and control of family assets, are complex and, although vital, don’t just involve technical elements like shareholder agreements, and tax and estate planning. We believe that having a common vision and a guiding set of principles is a necessary first step before embarking on more technical plans. This is especially true when family members have starkly different opinions or goals, there’s unequal control of the asset, or certain family members have more access to information.
Colin expects to retire fully at the age of 75 allowing seven years for succession planning, and has three main goals:
- Clearly define who will succeed him as company president and chief executive;
- Adequately prepare the next generation for leadership; and
- Ensure the two children who aren’t involved in the business are treated fairly when it comes to the family’s wealth.