Overnight Succession

Keeping the Company Intact

When the head of a family business suddenly dies or is so severely disabled he or she can no longer run the company, the people who have to pick up the pieces are in mourning or severely stressed. Handling succession issues at such a time can be overwhelming. While you may be able to postpone the grieving process (as long as it is not postponed permanently), the business at hand can't wait.

The Stein family, for example, immediately sent a letter to their camping "family" (staff, alumni, customers) telling them what happened but assuring them that Camp Echo Lake, which the family had run since 1946, was important to them and that they were going to keep it going. "My mother, Amy, brother George and I spent a lot of time talking with key staff," Tony says. "They needed contact with the family during this period. A lot of [employees] thought of Dad as a father."

Within a couple of weeks, Tony and George (who directs the camp's daily programs and is its chief marketer) were visiting bankers and vendors to let them know they were serious about the business and to share their plans for moving forward.

Sudden disability is often more splintering for a family business than sudden death. Rhanda Salameh's grandfather, for example, did not have a clear picture of who was going to succeed him in his Illinois granite manufacturing firm when he suffered a stroke nearly four years ago. "The only thing we knew for sure was that controlling interest in the firm would pass to family members, and I would have a greater share than others," Salameh says. A clinical social worker by profession, Salameh knew she would ultimately be involved in the business in an advisory way but never expected to be thrust into the role of president.

Taking charge was no easy matter. "Over the course of a week or so, I had a number of conversations with my grandfather and got his approval to get involved in pending business matters," Salameh says. For a year, she wrestled with the gritty details of negotiating union contracts and hassling with lawyers, not to mention keeping operations running. Meanwhile, her recovering grandfather still yearned for a role in the company.

"Ultimately, I told him I would be willing to devote all my time to running the company, but I needed full authority to make decisions-consulting with him when he was physically able to do so," Salameh says. It was difficult, but Salameh was able to establish her authority with the shareholders and the board of directors, thanks to help from her grandfather's personal attorney, who confirmed the founder's wishes. A year later, with her grandfather's approval, Salameh sold the company. She's now a family business consultant with LSI Resource for Family Business Management in Oakbrook Terrace, Illinois.

"Disability brings with it uncertainty," says Pat Frishkoff, director of the Austin Family Business Program at Oregon State University in Corvallis. "You are dealing with the continuing care of the family business head, and you don't know whether the person will return. In one situation, a father was diagnosed with cancer, and initially it looked as if he would die very shortly. The children rallied, adding even more business responsibilities to their already full plates, and one of the sons took charge. Then the father went into remission, returned to work and undid all the changes the children had instituted. The son who had taken over went back to being a peon." The business and the family suffered from the upheavals.

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This article was originally published in the February 1996 print edition of Entrepreneur with the headline: Overnight Succession.

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