Seated, Mike C. Wells, Sue Wells Sargeant. Standing, from left, Greg A. Wells, Gary M. Wells, Michael J.

Wells and Doug J. Wells.

f r o m t he e d i t o r

What is a family?

May, the U.S. Census Bureau reported that married couples represented only 48% of U.S. households in 2010, the first time the percentage had dropped below half of all American households. In 1950, by comparison, 78% of all American households consisted of married couples. Whats more, only one-fifth of households in the 2010 census consisted of married couples with children, compared with 25% in 2000. Some people view these statistics as a sign that the family as an institution is disappearing. Others say the family is as important now as it always was, although there are now more ways in which families are formed. In this issue, attorney Joe Goodman discusses the estate planning implications of todays demographic realities. Language that once was boilerplate in a will, such as natural-born children or born in wedlock, may have consequences you didnt intend, Goodman cautions. As a family business is transferred to the third generation and beyond, many families develop ownership policies. Most (72.6%) of the U.S. family business owners who responded to our 2011 Family Business Survey said they have a formal shareholder agreement. Of those who had such an agreement, 78.4% said it covered who is permitted to own shares and 62.4% said it stipulated who can inherit shares. Family business advisers say a shareholder agreement is important for those who dont want stock to fall into the hands of anyone outside the family. But who should be included in the family? What are the ramifications of limiting that definition to blood relatives? And, conversely, at what point does inclusiveness become unwise? Consider this recent, high-profile case: Susan Gore, a daughter of the founder of Gore-Tex maker W.L. Gore & Associates, adopted her ex-husband so her children could receive more from a family trust. She had spent too much of her own inheritance and wanted her kids to have a larger share. As the children of a grandchild (Susan Gores adopted ex-spouse), her children would be entitled to more than they would have received without the legal maneuver. At our Transitions East 2012 conference, to be held April 25-27 in Orlando, Fla., a panel of family business members will discuss Ownership Strategies for MultiGenerational Family Enterprises. Panelists will describe how they arrived at their definition of family and how they decided who may own business stock. Establishing such policies is one of the important roles of a family council. (Of course, this also raises the question of who is eligible to serve on a family council!) No matter who is considered a part of your family, and how they joined the clan, it is essential that they openly discuss ownership and estate planning issues.
ast

Barbara Spector bspector@familybusinessmagazine.com

Photo: RichaRd Wuest

www.familybusinessmagazine.com

co n t e n t s

March/april 2012
Age 70-80

Vol. 3, No. 

= Female = Male

50-60

CoVer Story

= Deceased

44 Blue Bunnys opportunities multiply

Wells Enterprises, maker of Blue Bunny ice cream, has ambitious plans to grow way beyond $1 billion in sales. To help the company achieve that goal, family members restructured management and the board, putting the needs of the business first. Deanne Stone

30-40

52 Passing on the torch without blowing up the family 10-20

The authors succession process began without a formal plan. He eventually realized that the doit-yourself approach had lost traction on both the business and family fronts. Jack MacBean
Age 85-100 OW = out of wedlock A = adopted DS = donor sperm IV = in vitro
OW 59 A dramatic transition

2 (2005)

50-75

Horst Engineering of Connecticut successfully passed 2 1 2 to the third generation, but not without some deep soul-searching. Dave Donelson

20-50

49 Survival through adaptation

1-25 Connolly Brothers Inc., a construction management company in Beverly, Mass., has endured hard times by reshaping its mission. Dave Donelson

Family Business March/April 2012

56 Multiple marriage planning

The family tree has lots of new branches. Because IV A A were building our families in so many different ways, estate planning is a lot more complicated than it used Contents continues on page 4 to be. Joe M. Goodman
COVER PHOTO: WElls EnTERPRisEs, inC./MElissa siEja

contents

continued

79

14

80
De pArtM en t s
1 From the Editor What is a
family? Barbara Spector

8
64 Directory Advisers for family
companies.

22 Matthew F. Erskine: Risk

assessment should include estate plans.

79 profile A 116-year-old product

is now trendy. Sally M. Snell

6 publishers page Sharing the

story. Caro U. Rock

24 Tish Squillaro: The unkind

cut: Firing a family member.

80 profile Robert Is Here, along

with his family. Carol Brzozowski

8 Openers Family enterprise stars

in The Descendants. At the Helm: Chris Koch, CEO of New Era Cap Company Inc.

28 Frederick D. lipman and

linsey B. Bosselli: A family constitution is a tool to preserve a familys legacy.

A Dv isers Foru M
20 andreas raharso: There are
risks involved in professionalizing family businesses.

63 Toolbox Family business apps

for the iPad and iPhone. Barbara Spector
4
Family Business March/April 2012

30 Jeffrey a. Markowitz and

christopher a. Davis: Drop and freeze transactions minimize estate taxes.

pu b l iS h e r 'S pa g e

Sharing the story

an interesting promotion for Ancestry.com crossed my screen, so I decided to sign up and see what more I could learn about my familys history. My first cousin Robert had been anointed the family scribe and for years had been gathering stories and official documents tracing our familys history in America. However, I wanted to delve even further into our familys business heritage, so I consulted my 91-year-old father. I knew my fathers father came to the U.S. at the turn of the century to join his uncle in Chicago in the grain business. The family had been in the hops business, which included grain trading, in Fuerth, Germany. A few years later, my grandfather, Paul Uhlmann, moved to Kansas City, where he and his son Pat established their own grain business. My grandfather, uncle and, later, my father, expanded the business to include flour milling and food products. All three related colorful stories of growing the business, keeping up with cousins around the globe and life in Kansas City. Family gatherings provided a perfect forum for these narratives, and they had quite an impact on me. One such story involved my grandfathers personally signing affadavits for almost 400 refugees to come to America to escape the Holocaust. Our family received thank-you letters for decades, and my grandfather was recognized with the Eleanor Roosevelt Humanitarian Award. Over the years, I have passed on several of these family stories to our sons Bill, who joined our family business after completing his J.D./MBA, and Tom, a physician. There are many reasons to hand these stories down. According to Kathryn Levy Feldman, a freelance contributor to Family Business who has also written family business history books, The tie that binds stories together is the process itself of assembling archives and gathering people to tell the family as well as the company history. Feldman wrote a cover story for Family Business Magazine (Spring 2006) that profiled the Rubenstein family of New Orleans, who quickly got their clothing store back in operation after Hurricane Katrina. The family was proud that they were able to track down their employees and offer them their jobs back. Quite often, such family stories involve life lessons. Future generations of a family in business can receive valuable insights into what drives family executives, what shaped family dynamics, what outside forces intervened and what lessons can be learned from their experiences. Not all narratives are written down and published as books; many are oral anecdotes and stories that probably become more colorful with each passing generation! Make sure someone in your family is charged with chronicling your family history.

everal months ago,

Caro U. Rock carorock@familybusinessmagazine.com


Family business March/april 2012
Photo: RichaRd Wuest

O P ENERS

The guide for faMily CoMpanies ediTor-in-Chief & assoCiaTe publisher

Barbara Spector
bspector@familybusinessmagazine.com arT direCTor Bill Cooke & Company bill@billcooke.com ediTorial advisory board Ross J. Born Just Born Inc. Philip A. Clemens The Clemens Family Corporation Lansing Crane Crane & Co. Inc. Anne Eiting Klamar, M.D. Midmark Corporation Charlotte Lamp, Ph.D. Port Blakely Companies Sylvia Shepard Menasha Corporation Edouard Thijssen TrustedFamily.net, Aliaxis publisher

Family enterprise stars in The Descendants

The film, starring George Clooney, shows what can happen when a family of wealth has not passed its values to succeeding generations.
by barbara speCTor

Bill Cooke

Caro U. Rock
carorock@familybusinessmagazine.com publishing direCTor GRID Media LLC david@gridmediallc.com

David Shaw

Scott Chase

adverTising direCTor GRID Media LLC scottchase@verizon.net subsCripTions & reprinTs

I went to see The Descendants, I hadnt read much about the film. I knew only that the performance by the star, George Clooney, had been highly praised by critics and that the director was Alexander Payne, who previous credits include Election, Sideways and About Schmidt. As I sat in the theater, riveted to my seat, I was surprised that the film addressed so many of the issues I encounter each day
hen

in my professional life (although, alas, my workdays involve neither Mr. Clooney nor Hawaii, where the action takes place). In mid-December, I called some family business advisers who also had seen the film to share our thoughts on the issues of wealth and inheritance confronted by the characters. (Warning: This article contains spoilers. If you havent yet seen the filmand I highly recommend that you dostop reading now if youd prefer not to learn key plot details.) Many cousins The film, shot on location, is based on the novel by Kaui Hart Hemmings, who grew up in Hawaii. George Clooneys character, Matt King, is one of many cousins in a prominent family descended from the marriage of a Hawaiian princess to a white banker generations ago. Matt, an attorney, is the sole trustee of 25,000 acres of unspoiled land on Kauai held in a family trust. Because of the common law rule against perpetuities, the trust is due to expire in seven years. Matt has lived frugally (too frugally, his father-in ErIk JordAN/rEtNA ltd/CorBIS

Barbara Wenger
bwenger@familybusinessmagazine.com aCCounTing

Jerri Smith-Baldwin
jsmith@familybusinessmagazine.com faMily business publishing CoMpany ChairMan presidenT

Milton L. Rock Robert H. Rock

Chief finanCial offiCer

Lisa M. Cody
ediTorial & business offiCes

1845 Walnut Street, Suite 900 Philadelphia, PA 19103 PHone: 215-567-3200 fAx: 215-405-6078
www.familybusinessmagazine.com
Family Business (ISSN 1047-255X) is published quarterly. Copyright 2012 by Family Business Publishing Co. All rights reserved. No part of this publication may be reproduced in any form, including photocopy, without permission.

The Descendants star George Clooney poses with Shailene Woodley, who plays his eldest daughter, at the films Beverly Hills, Calif., premiere.

Family Business March/April 2012

OPENERS
law complains), saving all his income from the trust and living solely off his earnings as a lawyer. Some of his cousins, however, have spent all their trust income. evidently, few of them work. (All I have is time, says one cousin who offers to give Matt and his family a ride on Kauai.) Most of the cousins want to sell the familys land quickly. A subset of the group of cousins has been meeting regularly in Matts law office to discuss offers for the property. They have rejected the highest bid, from a Chicago group seeking to build big-box stores on the property. Instead, they favor an offer from a Kauai man, Don Holitzer, who plans to turn the land into a golf course and residences (though two of the King cousins oppose any sale of the property). A shareholder vote has been scheduled to confirm the familys decision. At the same time that Matt is pondering the sale of his ancestral property, he is dealing with a devastating situation in his nuclear family. His wife, elizabeth, lies in a coma after having been injured in an accident on a rented boat. Doctors have told him that she will not recover, and under the terms of her living will she must be taken off life support. By his own admission, Matt up until now has focused primarily on his work and has assumed the role of back-up parent, but because of elizabeths accident is now serving as single dad to his two daughters: substance-abusing 17-year-old Alexandra and tenyear-old Scottie, who has been acting out at school. Thats a lot for Matt to deal with, but theres more. Matt learns that elizabeth had been having an affair and at the time of her accident hoped to run off with her paramour. Midway through the movie, Matt learns that the man his wife had been seeing is a real estate agent who is Holitzers brother-in-law and would stand to profit considerably if the deal the King family favors is closed. Trustee faces pressure The movie portrayed [Matts] conflict very effectively, says Allison Shipley, a principal at PwC. The role of a trustee is really a hard thing to take on. The responsibilities are especially challenging for a sole trustee acting on behalf of an extended family, Shipley notes. Its an unbelievable job for that one person, she says. Theres an incredible amount of pressure. [Matt] was a trustee in so many ways, observes Justin Zamparelli, a partner at Withers Bergman LLP. He was even entrusted to protect peoples feelings. for example, Zamparelli notes, elizabeths father blames her accident on Matt (speculating that she wouldnt have injured himself if Matt had bought her a boat of her own) and calls her a faithful wife, an assertion that Matt doesnt contradict. In another scene, Matt hosts a gathering for all elizabeths friends (notably, no King cousins are present) and invites them to go to the hospital to say goodbye to her without mentioning her affair and its effect on him. He enlists Alexandras help in protecting her younger sisters memories of her mother. I was struck by the portrayal of the extended King family as a group that lives near each other yet is not close-knit. Matt and his daughters run into several King cousins at various points in the movie, but these relatives express only a perfunctory interest in elizabeths condition and none of them offers much in the way of consolation to the young girls whose mother is dying. obviously, the King cousins could have benefited from family governance and education efforts. There doesnt seem to have been any real effort by the family to cement the relationship between the family and the asset, comments David Lansky, a principal consultant with the family Business Consulting Group. The King ancestors, PwCs Shipley observes, had created a trust to preserve their land, but had taken no measures to preserve the family val-

updaTe W.d. Cowls protects nearly 3,500 acres

W.D. Cowls Inc. of North Amherst, Mass., profiled in the Winter 2012 issue of Family Business (Reinvention of an 18th-century family enterprise, by Jayne A. Pearl), has entered into a partnership to protect 3,486 acres of working forest land. According to Massachusetts Energy and Environmental Affairs Secretary Richard K. Sullivan Jr., the conservation restriction is the largest on a contiguous block of privately owned land in Massachusetts history. The conserved forest has been named the Paul C. Jones Working Forest in memory of W.D. Cowls eighth-generation owner, who died suddenly on Nov. 24, 2011. His daughter, W.D. Cowls president Cinda Jones, says the conservation deal was five years in the making. According to Sullivans office, approximately $3 million of the $8.8 million deal came from state funding. Another $5 million was contributed by the U.S. Department of Agriculture Forest Services Forest Legacy Program, and $839,600 was secured from the Open Space Institute. The remainder was raised by the Kestrel Land Trust of Amherst, Mass., and the Franklin Land Trust of Shelburne Falls, Mass. W.D. Cowls will continue to own and manage the woodland and conduct sustainable forestry operations under a state-approved plan. The Family Business article erroneously reported the size of W.D. Cowls land holdings. The company, which is the largest private landowner in Massachusetts, owns tree farms in 28 towns. According to Cinda Jones, the total is several thousands of acres; the company does not release the exact figure.

10

Family Business March/April 2012

OPENERS
ues. Clearly, she says, that family hadnt done anything to reinforce, or even establish, the cultural importance of the land. even though the family hadnt inherited a governance structure, Matt could have worked with his relatives to institute one, Lansky points out. He was the trustee, but he really didnt see himself as the family leader, Lansky says. a communitys concerns Throughout the film, local residents whom Matt encounters urge him not to sell the property, and after those conversations an internal conflict registers on Clooneys face. The whole state of Hawaii had an investment in keeping the land pristine, fBCGs Lansky notes. Should [the King family] do anything about that? What does it mean to be a steward? T h e f i l m s d u a l p l o t l i n e s elizabeth Kings marital infidelity and the King cousin consortiums planned infidelity to their legacy intertwine as Matt takes his daughters (and Sid, a slacker friend of older daughter Alexandra) on a trip to Kauai to visit the land and get a look at the man who has been sleeping with his wife. As the family gazes at the pristine property, Alexandra remin i s c e s a b o u t h e r ex p e r i e n c e s camping on the land with her mother. (Interestingly, it was her mothernot her father, the parent with the ancestral tiewho instilled in Alexandra a connection to the land.) Younger daughter Scottie plaintively asks, What about me? To PwCs Shipley, that question is a pivotal turning point in the film. Revisiting the familys land, she says, gives Matt the perspective of the ancestors, and of the daughters. I agree. Though one can think of several alternative titles for the film, The Descendants is the most appropriate, and that scene demonstrates why this is so. part of [Matts] decision. of course, there are more alternatives available to the family than just selling or not selling the land. The Kings could work with advisers to find a way to generate some cash from the property while preserving a sigquoTable nificant portion as open space. A family council Small and medium-sized or family office could provide a forum for them to companies [traditionally] were explore such options in bigger risk-takers in many ways. the seven years before the trust expiresif, after the In todays environment, theyre contentious vote, the cousnot taking risks to the same ins could possibly agree to establish such structures. extentlike anticipatory hiring Matt never tells his cousand its stifling growth. ins that someone connected with the Holitzer bid Manpower Group CEO had had an affair with his wife. His failure to disclose Jeff Joerres (Financial Times, the relationship would not Sept. 15, 2011). necessarily help his cousins prevail in a suit against The family gathers him, attorney Zamparelli says, As Matt prepares the ancestral home because Matt did not benefit in a for the arrival of his cousins who pecuniary way from his decision not will gather to vote on the sale, the to selland it would be difficult to camera lingers on portraits of his prove that the situation was a factor ancestors and other family memenin his decision. tos. The family stakeholders cast In the films penultimate scene, their votes and, unsurprisingly, Matt and his daughters scatter they overwhelmingly favor a sale to elizabeths ashes at sea. Zamparelli Holitzer. In the end, however, Matt says he was taken by the cameras refuses to sign the papers. His cousfocus on the serene coastline, folin Hugh (played by Beau Bridges) lowed quickly by a view of unsightly warns Matt that the family would developed land off the coast. sue him. Then I might see more of Matts refusal to sign the papers you, Matt responds. feels like a victory to the audience The King family, Zamparelli says, in the theater. Whether or not the basically were fortunate members fictional family ever could come to of a DnA pool that owned this propterms with his action, they certainerty; they hadnt earned it. And at ly would always view it as a pivotal FB the end of the day, I think that was point in their shared history. n

CorreCTIonS
The article The rapid rise of a global hotel group (FB, Winter 2012) incorrectly stated where members of the Ueberroth family are based. John and Gail Ueberroth split their time between Paris and Newport

Beach, Calif.; their daughter, Lindsey, is based in Chicago; and their son, C a s e y, o p e r a t e s f r o m N e w p o r t Beach. The article E. Ritter & Co.s governance journey (FB, Winter 2012) contained several errors. Ronda

Ritter Ray is the second president of the Ritter family council, and Ritter Arnold is a fourth-generation family member. Also, two non-family employees sought to succeed Dan Hatzenbuehler as CEO; there were no candidates for the job within the family.

12

Family Business March/April 2012

AT T H E H E L M

Chris Koch
CEO, New Era Cap Company Inc., Buffalo, N.Y.
First job at this company: I did a little of everything. I packed caps, swept the floor, worked in shipping and receiving, did some artwork and worked on mechanical projects. I even worked on the line making caps. It takes 22 steps to make a fitted capIve done all 22. Most memorable thing I learned from my father: Your word is your bond. If you tell someone youll do something, youd better make sure you do it. Most memorable thing I learned from my mother: The art of perfectionism. Do it right or dont do it at all. Best thing about this job: I get to see our products on the greatest athletes and entertainers in the world. Worst thing about this job: Making tough decisions about staff. Sometimes the best people dont work out. one of our greatest successes: our long relationship with Major League Baseball. Weve been the supplier of headwear to the teams since the 1930s. If you have a product that hasnt been tried before and you believe in it, I believe any of the leaguesbaseball, or the nfL or any of the leagueswill give you an opportunity. But you need a good product and a good business plan, Generation of family ownership: fourth. Annual revenues: More than $500 million in 2011. number of employees: 2,000 globally. Years with the company: 35.
14
Family Business March/April 2012

one of my greatest accomplishments: Taking a small family manufacturing company and turning it into a global brand. To go global, be prepared to spend a lot of time in the markets you want to develop. Advice Id give someone wishing to enter this business: It might look fun, but you better be prepared for long hours. We go up against the likes of brands like nike, Reebok and others. on a day off I like to. spend time with family and golf or ski. Philanthropic causes our family supports: Cancer research. My father died of cancer, so its a cause thats close to us. Book(s) I think every family business leader should read: Why Me? Wealth: Creating, Receiving, and Passing It On, by Denise Kenyon-Rouvinez, Thierry Lombard, Matthieu Ricard and John Ward. I realized I had emerged from my parents shadow when my father came to my office door and asked if I had a few minutes to talk. for years, on Saturdays, Id try to get the courage to go to his office and ask him about the business. Future succession plans: My two older children have chosen different paths. We have executives and professional managers in place and are preparing to move forward without another family member. But Im only 51; I have a long way to go. Words I live by: Dont ever assume. Get the facts and make educated decisions. As told to Patricia Olsen

and you must be able to show them how you can generate revenue for them. Best advice I ever got: Surround yourself with great people and learn how to listen. Quote from our companys mission statement: We believe in self-expression. We do mass customization for our customers, which gives our endconsumers the ability to buy something that reflects their affinity to a team or their personal style, for example. on my office desk: My 2009 Yankees world championship ring. My father always got a ring from George Steinbrenner when they won, and the franchise carried on the tradition with me.

SuStaining and Building the Multi-generational FaMily CoMpany

April 25-27 grand Bohemian hotel orlando, Florida

Register Online: www.familybusinessmagazine.com/transitions the conference created for family companies by family companies
Transitions East 2012, from Family Business Magazine and Stetson University, offers powerful sessions focused on delivering ideas you can put to work now to sustain and build your multi-generational family company. This conference is for family companies and enterprises of all sizes and ages. Transitions East 2012 focuses on three key touchpoints that can make a significant difference in the long-term sustainability of your family business: Family Employment Policies: Landmarks and Landmines Ownership Strategies for Multi-Generational Family Enterprises: Who Can and Should Own What? The Family Enterprise and the Extended Family: Fostering Cooperation and Resolving Conflict Among Siblings, Cousins and Married-Ins FEaTuring: Speakers from family companies: As always, our focus is on speakers from family enterprises, sharing real-life problems and solutions. Collaborative workshops: Opportunities to work through family issues via case studies. intimate, open environment: Limited attendance, and a private environment in which to share challenges and opportunities with other families. ask the Experts: A special discussion session with key family business advisers. Special content and sessions for next-generation and married-in family members networking with families like yours: Hosted networking, an opening reception, meals, breaks and workshops are all designed to allow you to meet many family enterprise attendees. Family focus: Brought to you by family-owned Family Business Magazine, held at a family-owned hotel, with a group dinner at a family-owned restaurant.
platinuM SponSor gold SponSorS

Silver SponSorS

Bronze SponSorS

FeAtuRed FAmily SpeAkeRS

(For complete speaker biographies, visit www.familybusinessmagazine.com/transitions)

Harold l. yoh iii

Ben Grossman
Grossman Marketing Group

david Grossman
Grossman Marketing Group

Felix Grucci Jr.

Fireworks by Grucci

Jamie Richardson
White Castle

Day & Zimmermann

Chris Herschend
Herschend Family Entertainment

Jack mitchell
Mitchells Family of Stores

eric Allyn
Welch Allyn

paul C. darley
W.S. Darley & Co.

preston Root
Root Family Board of Directors

tim Schultz
Lundberg Family Farms

Jill lundberg
Lundberg Family Council

Charlotte lamp, ph.d.

Port Blakely Companies

Julie Appling
Eddy Family Council

Sylvia Shepard
Smith Family Council Menasha Corporation

Steve landaal
Landaal Packaging Systems

Joan mcVaugh
Laboratory Testing Inc.

terry kohler
Windway Capital Corp.

torri Hawley
Stetson U. student

Henry k. Brown
Miller Electric Company

your hosts:
Barbara Spector Editor-in-Chief & Associate
Publisher, Family Business Magazine

Caro u. Rock Publisher, Family Business

Magazine

Greg mcCann Professor, Stetson University Richard C. kessler

The Kessler Collection

mark kessler
The Kessler Collection

laura kessler Van til

The Kessler Collection

peter Begalla Program Manager, Stetson

University Family Enterprise Center

plus these industry experts and session leaders:

timothy OHara Partner, PwC mark t. Nash Partner, Personal Financial Services, PwC Bryant W. Seaman iii Managing Director and Head of Private
Asset Advisory Services, Bessemer Trust

dirk Jung Chairman and CEO, Pitcairn Ann m. dugan Founder, Institute for Entrepreneurial Excellence, Nancy drozdow Principal, CFAR F. douglas Raymond iii Partner, Drinker Biddle & Reath LLP thomas J. pauloski National Managing Director, Wealth
Management Group, Benstein Global Wealth Management

Joseph M. Katz Graduate School of Business, University of Pittsburgh

Arne Boudewyn Senior Vice President and Director of Family

Dynamics, Wells Fargo Family Wealth

Justin m. Zamparelli Partner, Withers Bergman LLP

CONFeReNCe AGeNdA
(Subject to change as speakers are added.) Wednesday, April 25, 2012
3-6 p.m.: Conference Registration 6-6:45 p.m.: Welcome Speakers: Wendy Libby, Stetson University; Caro Rock, Family Business Magazine; Peter Begalla, Stetson University Opening discussion Generational Transition and Sibling Cooperation in the Kessler Family Moderator: Tim OHara, PwC Speakers: Richard C. Kessler, Laura Kessler Van Til and Mark Kessler, The Kessler Collection (owner of the Grand Bohemian Hotel) Hosted Networking 6:45-9 p.m.: Reception adoption fit in? How do you prune the family (company) tree? Moderator: Justin Zamparelli, Withers Bergman LLP Speakers: Julie Appling, Eddy Family Council; Preston Root, Root Family Board of Directors; Chris Herschend, Herschend Family Entertainment 1-2 p.m.: Group lunch 2-2:45 p.m.: WORkSHOp: Ownership policies for the Family enterprise Workshop leader: F. Douglas Raymond III, Drinker Biddle & Reath LLP 2:45-3:15 p.m.: Networking Break 3:15-4:15 p.m.: pANel: Ask the experts Top family business advisers discuss critical legal and financial issues related to shareholder agreements, sale/liquidity policies, family offices, structures for dividends and reinvestment and more. Panelists will answer audience questions. Moderator: Scott Chase, Family Business Magazine Speakers: Bryant W. Seaman III, Bessemer Trust; Arne Boudewyn, Wells Fargo Family Wealth; Mark T. Nash, PwC; Thomas J. Pauloski, Bernstein Global Wealth Management 4:15-5 p.m.: keynote Address Alignment of Interests: Creating Harmony and Engagement in the Family Company Speakers: Ben and David Grossman, Grossman Marketing Group 5-5:15 p.m.: Session Wrap-up Speaker: Barbara Spector, Family Business Magazine 5:15-6:15 p.m.: Adviser & Family Roundtable discussions/Networking Attendees meet in small groups with select advisers to discuss family issues. Special roundtables for Next-Generation and Married-In attendees. 7:15-9:30 p.m.: Group dinner At Ceviche, a family-owned restaurant. Speaker: Joe Orsino, Ceviche Conflict Among Siblings, Cousins and married-ins Focused on helping siblings, cousins, family branches and married-ins to work together. Includes discussion of family codes of conduct, systems for breaking family deadlocks, conflict resolution and communications among the various branches of a multi-generational family enterprise. Moderator: Dirk Jung, Pitcairn Speakers: Paul C. Darley, W.S. Darley & Co; Jill Lundberg, Lundberg Family Council; Jamie Richardson, White Castle; Eric Allyn, Welch Allyn 9:30-10:15 a.m. WORkSHOp: dealing with dissent Workshop leader: Ann M. Dugan, Institute for Entrepreneurial Excellence, University of Pittsburgh 10:15-10:45 a.m.: Networking Break 10:45-11:45 a.m.: pANel: Successful Strategies for engaging married-ins Best practices for engaging married-ins and welcoming them into the family and the family company. Moderator: Sylvia Shepard, Smith Family Council, Menasha Corporation Speakers: Tim Schultz, Lundberg Family Farms; Charlotte Lamp, Ph.D., Port Blakely Companies; Karen Bichin, ABC Recycling 10:45-11:45 a.m.: Next-Gen Breakout Session Next-generation members are invited to a special guided workshop. Workshop leader: Peter Begalla, Stetson University 11:45 a.m.-1 p.m.: pANel: NextGeneration engagement How can the next generation work to foster family cooperation with the older generation and their siblings/cousins? This session focuses on strategies for engagement with the family enterprise. Moderator: Greg McCann, Stetson University Speakers: Terry Kohler, Windway Capital Corp.; Torri Hawley, student, Stetson University; Henry K. Brown, Miller Electric Company 1-2:30 p.m.: Closing keynote and lunch Speaker: Felix Grucci Jr., Fireworks by Grucci

thursday, April 26, 2012

7-7:45 a.m.: Group Breakfast 7:45-8 a.m.: Welcome 8-8:45 a.m.: keynote Address Transitions, Ownership and Governance: The Day & Zimmermann Approach Speaker: Harold L. Yoh III, Day & Zimmermann 8:45-10:15 a.m.: pANel: Family employment policies: landmarks and landmines How are family members hired? How are they fired? How much should they be paid? Who manages them? And do you compensate non-employee family members who contribute significantly to the family? Moderator: Nancy Drozdow, CFAR Speakers: Jack Mitchell, Mitchells Family of Stores; Joan McVaugh, Laboratory Testing Inc.; Steve Landaal, Landaal Packaging Systems 10:15-10:45 a.m.: Networking Break 10:45-11:30 a.m.: WORkSHOp: Family employment policies Workshop leader: Dennis Jaffe, Saybrook University 11:30 a.m.-1 p.m.: pANel: Ownership Strategies for multi-Generational Family enterprises: Who Can and Should Own What? How, exactly, do you define family? Who can own stock? How is stock acquired? Who can inherit it? How does marriage, divorce or

Friday, April 27, 2012

7-8 a.m.: Breakfast and Networking 8-9:30 a.m.: pANel: the Family enterprise and the extended Family: Fostering Cooperation and Resolving

ReGiSteR tOdAy FOR BeSt RAteS!

Register online at www.familybusinessmagazine.com/transitions
Please Note: Attendance at this conference is limited to members, owners, senior executives or shareholders of family-owned businesses. Senior advisers to family businesses may attend with family members. Attendance is strictly limited to the first 130 registrants. early Bird Registration (Register before 3/16/2012) First attendee from your family company: $1,395 Each additional attendee from your family company: $895 Each additional Next-Generation attendee (ages 15-29): $695 Standard Registration (After 3/16/2012) First attendee from your family company: $1,595 Each additional attendee from your family company: $1,095 Each additional Next-Generation attendee (ages 15-29): $895

Past attendees of Transitions conferences and Stetson U. alumni: Deduct 10% from the registration fee. Registration price includes all conference materials, as well as breakfast, lunch and dinner on April 26; breakfast and lunch on April 27; and a welcome reception and buffet dinner on April 25, as well as refreshment breaks. Hotel Reservations: $179 (plus 12.5% state and local taxes; includes free Internet access). to reserve your rooms, call (866) 663-0024 prior to April 11. Identify group name as Family Business Magazine/Stetson University Transitions Conference.

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Cancellation policy: all conference cancellations must be made in writing and sent to Justine Wood, Transitions Program manager, 13631 maidstone lane, Potomac, md 20854; faxed to (301) 987-0476 or emailed to justineawood@me.com. registrants who cancel more than four weeks prior to the program date are entitled to a full refund of the registration fee; if canceled within four weeks, but more than one week prior to the conference date, 50% of the conference registration fee will be refunded; within one week of the conference date and no shows, no refund is possible. Family Business magazine and stetson Family enterprise Center may cancel the program if attendance does not meet required levels; in case of cancellation or rescheduling, full refunds of registration fees will be made. Travel fares and hotel deposits cannot be reimbursed.

A d v i s e r s Fo r u M
started as a family business in 1901. Today, none of the owners belong to the Yeo family that gives the brand its name. By the 1990s, squabbles over investment and business management decisions had caused tensions among the third generation of the Yeo family and led to an acrimonious dissolution of the business. Yeos history illustrates that the initial success attained through professionalizing family businesses is often offset by problems, squabbles or even family feuds. The reason why many family companies fail to survive beyond the third generation actually lies in the process of professionalizing itself. How so? a. Professionalism cannot sufficiently address By AndreAs rAhArso the complexity associated with family ties. The he first generation builds the business, the involvement of the family in family businesses creates second expands it and the third destroys it. complexity and may undermine the business structure It is a universally acknowledged phenom- and theoretical methodologies commonly employed in enon that few family-owned businesses sur- non-family enterprises. For instance, professionalism vive beyond the third generation. While most requires all organizational processes to be intrinsically business owners are highly successful in building and involved in delivering shareholder value. However, in the managing their companies, they are often less case of a family business, successful when it comes to transitioning their organizational processes The initial success enterprises from one generation to the next. must factor in not only In the typical evolution of a family business, the business, but also the attained through it moves from the controlling owner stage to the family dimension, which professionalizing sibling partnership stage and then to the cousin encompasses both human family firms is often consortium stage. Professionalizing the busiand emotional aspects of ness is generally considered to be a necessary the family. Enforcing prooffset by problems, step in its evolution, as expansion and survival fessionalism could mean squabbles or even feuds. would naturally require companies to benchignoring the family dimenmark industry best practices and tap into the sion, thus resulting in famexternal labor market for access to a higher quantity ily conflicts that threaten survival of the business. and quality of human resources. The best practices and b. Professionalism causes family businesses to experts in the corresponding fields can contribute sig- lose their inherent competitive edge over nonnificantly to a family firms expansion and success poten- family businesses. It has been widely established that tial. They also in turn inject more professionalism into family businesses have a competitive advantage over the firm, enabling the family company to achieve rapid non-family businesses. For instance, family firms have a financial growth within a short time span. unique working environment that fosters a family-orientWhile conventional wisdom dictates that higher levels ed workplace and inspires greater employee care and loyof professionalism within family businesses will trans- alty. In fact, family businesses have reportedly seen better late into better firm performance, there is, however, a performance than non-family businesses, with an annulimit to the amount of pro- al return on assets that is 6.65% higher than the return fessionalism that a family on assets of non-family firms (David Thayne Leibell, firm should adopt. Succession planning, Trusts & Estates, March 2011). Let us examine Yeos, a However, as the level of professionalism rises, the trawell-known food and bever- ditional business structure and family relationships in age brand in Asia that was the family business are gradually eroded. These consequences, coupled with the inherent complexity of the family business, may cause the organization to lose its Andreas Raharso competitive edge and eventually fail to survive. (andreas.raharso@

Professionalism can entail risks in family firms

haygroup.com) is the director of Hay Groups Global r&d Center for strategy execution, based in singapore.

Family capital as the cornerstone of success Despite well-known headlines that captured the publics attention, such as Rum on the rocks: Bacardis family secrets are spilling into a court fight and Hot dog joint made famous on M*A*S*H [Tony Packos] threatened

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by family feud, many family businesses have successfully bypassed the cold, harsh track to transcend beyond their third generation. In fact, the worlds oldest hotel, Hoshi Ryokan in Japan, is a family business that has successfully run for 1,300 years and transcended across 46 generations. In the West, we have Lyman Orchards in Conneticut (managed by its eighth generation), Heineken in the Netherlands (managed by its fourth generation), etc. Indeed, successful family businesses today have engaged in some form of professionalization before they arrive at their current market standing and yet have managed to transcend beyond their third generation. Hence the question: Why them, and not the rest? What most successful family companies have done to achieve their current performance goes beyond professionalizing their businesses. While it is important to professionalize to attain strong financial capital, it is even more crucial to secure a high level of family capital. This is achieved through building a strong, gratifying and supportive relationship among family members. Family capital enables the firm to move forward as a unified body without strife and dissension, thereby ensuring its sustainability. Healthy relationships among family members aid in bonding the family together in tumultuous times and are a good form of defense in warding off hostile takeovers. A strategy that overemphasizes professionalism and neglects the family will lead to a deteriorating family business. Even though the business might thrive initially, the family, which forms the basis of the enterprise, will start to fall apart, ultimately causing the business to fail. The study Correlates of Success in Family Business Transitions, by Michael H. Morris and associates (Journal of Business Venturing, September 1997) found that 60% of succession plans failed because of problems in the relationships among family members. Kikkoman Corporation, a family company that was founded in 1630 and is still thriving today, demonstrates the importance of focusing on family as well as financials. A creed

the company adopted in 1926 formalized numerous habits and traditions typically found in families, including make strong morals your foundation, and focus on money last, strive for harmony in your family and have a family reunion twice a year. At these reunions, dont judge your family members based on their income but rather on their character. These core values were designed to support internal family harmony, and have worked well in sustaining the business. What defines family capital? Family capital is a unique form of social capital that is Continued on page 26

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years and asked whether any buy-sell or stockholders agreements existed. From the back room of his office he pulled out a photocopy of a 25-year-old stock buy-sell agreement that dated back to when the company was a very small, family-owned, rural telecom business. The existence of this document was news to everybody on the financing teamand to half of the family members still involved in the business. When I read the buy-sell agreement, I realized that this document could potentially derail the companys efforts to recapitalize and expand. Unbeknownst to everyone in the room, the agreement essentially gave all the signatories a perpetual right to buy corporate shares if the stock By MAtthew F. erskine was ever offered for sale or otherwise transferred to anyone other than a family member. To complicate matters, n family-owned businesses , what constitutes a risk the agreement provided for a new price calculation if the management plan? Astute executive teams plan a existing shareholders exercised their option to buy based response to disasters that might impede business on the book value of the stock, disregarding any thirdcontinuity. Yet interestingly, most risk management party offer or fair market value appraisals. plans fail to incorporate one issue that can have dire In other words, if stock were offered to these non-famconsequences for any family-owned business: the estate ily private equity investors, under the terms of the agreeplans of the family owners themselves. ment family members could buy those shares at book Issues involving succession, tax planning and owner- value and without the investors consent. Bottom line: ship are among the many challenges family businesses This meant the company couldnt bring in a private equiface if the corporate plan does not align with the estate ty partner to fund the acquisition of new assets. plans of the family owners. Failing to proactively manage Why did this clause exist? First, it was an attempt to these issues can create a domino effect that may perma- artificially depress the value of the stock. The reduced nently cripple a company. stock price applied to anyone who tried to transfer shares The advantages of proactive risk management became outside the family and would therefore penalize family evident to me when I advised a privately held telecom- members who tried to sell shares that had been given to munications company. The company was considering a them by their grandfather. The reduced value of the stock unique opportunity to quickly expand its regional foot- was also an effort to lower taxesa failed attempt, in fact, print. since the valuation in the buy-sell agreement was not My clients were seeking ways to recapitalize their binding on the IRS. The agreement was also designed to business so they could bid for assets being divested by keep ownership in the family, since transfers outside the a national wireless carrier following the governments family were effectively prohibited by the way the agreeantitrust ruling requiring that company to sell assets in ment was structured. the region. In most family businesses, the discovery of such an As they weighed financing options, it became clear that agreement could spark a crisis that at best would cause the executive team would need to reorganize the busi- a severe delay in business planning, and at worst perness to accommodate potential investors, and their own- manently throw the business plan off course. In this ership desires. I sat down telecommunications company, however, we had already with the attorney who had gone through the exercise of creating a risk management been doing the familys program that analyzed a series of what-if scenarios. estate planning for many One of those scenarios involved the steps we might take if we needed to extinguish the rights of family minority shareholders who Matthew F. Erskine is principal of The erskine were hostile to family members manCompany LLC, a strategic advisory firm located aging the business. While the scenarin Worcester, Mass., that counsels clients on io we had worked through centered the management of unique family assets, on the death of a key shareholder, including multimillion-dollar family businesses, our potential solutions were applinumismatics collections, fine art and Americana cable to this situation. collections, commercial and residential real Because we had the risk manageestate holdings, and family compounds (www. ment plan in place, we were able to erskineco.com). reorganize the company and bring

risk assessment should include estate plans

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on private equity investors within six weeks, allowing us to meet the deadline for bidding on the divested properties. Without the plan, everything would have collapsed.

the estate plan effectively accounted for potential tax consequences, and how will those tax payments affect the business? Does the plan set out steps for succession that are in keeping with the business plan? Scenario planning In the case of the telecommunications company, the When developing a risk management program for a scenarios we had initially developed were based on the family-owned business, its important to create two out- estate plan of the grandfather, a second-generation owner lines. The first takes a more linear, traditional approach of the business. The company managers had discovered to business continuity planning; it plots out options for that a clause in the grandfathers estate plan that froze events that can be forecast, or reathe value of his stock for his own sonably predicted. For example, you estate tax planning purposes had Buy-sell agreements and can project economic growth at difthe undesirable effect of significantferent percentages and analyze the ly increasing the income tax, and other clauses must align impact on the company, and the risk required distributions of cash from with the corporate plan. of taking on certain operating expenthe company to the grandfather. ditures in each growth scenario. Further analysis of the estate plan A proactive review will The second outline, however, is uncovered additional conflicts for uncover discrepancies. the one thats unique to each family the business that would have made it business because it involves issues difficult to obtain the capital needed that are not linear in nature, and are often rooted in for future growth initiatives. questions of ownership and control. To plot out this path, So we stepped back and looked at the trends affecting you need to brainstorm trends, and scenarios within each the family and the business. Whats happening in the trend. Instead of one linear path, you will have branches telecommunications industry? How is Grandpas health? of potential paths that link back to the core. Who is going to be the next generation of corporate manOften these trends link back to the familys estate plan agers? Where is the money coming from? Do we want to and what will happen when that plan is executed. Will keep the minority stockholders and, if not, how do we the family wealth be broken up and disbursed, or main- buy them out fairly? What if the IRS blows up a creative tained? Will the family keep the business or sell it? Has Continued on page 26

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rsums should be submitted, credentials evaluated and requirements fulfilled. And should a family member then be hired on the basis of merit, have a plan in place to measure success. Offer training and mentoring, making it clear that there are consequences for non-compliance. Determining the right placement The neophyte niece in the marketing directors spot is doomed from the start. More effectiveand fairis adherence to a requirement that family members have experience and education that are relevant to the position. A technique that we have found works well is to assign new family hires multiple quick hit projects with measurable metrics before considering them for high-profile positions. These smaller assignments allow them to learn and gain confidence, while establishing their credibility. After some time has passed, you may ask them to spearhead the rollout of a new policy or procedure to assess their interpersonal skills. Finally, consider projects that make relatives a part of the crowd so that they can build their network and gain support inside the company. Can this hire be redeemed? When a relative underperforms, often the issue is not the role itself; its that the family member was brought in at a level above his or her capabilities. A good way to save the situation is to restructure the position and create a development plan to build skills and foster growth. So that the reassignment is not perceived as a demotion, always focus on the business need, and not the person. Explain to the family member, The business is growing rapidly, so Im appointing a senior director for this department. Make certain, of course, that whoever is named to oversee your relative is a capable manager and has real authority. Sometimes the family member is a better fit for a different role. If so, begin a transition process that includes coaching and mentoring, allowing the person to move into a new opportunity with support. And, as you would with any other employee, revisit the move in 90 days to evaluate progress. If the problem is the result of a bad attitude, and you believe the relative is incapable of change, dont prolong the pain. Let the person go as soon as possible. Theres never a best time to pull the plug, but there are ways to minimize the agony afterward. Handling a difficult task Lets be honest. There is no comfortable way to fire a relative. There are, however, steps you can take to make it easier on the person youre letting go, and to ensure youre handling the situation properly. Gain early buy-in from other family members. As early as possible, begin discussing your impressions with other family members. Give substantive reasons why

the unkind cut: how to dismiss a family member

By tish squillAro

and, even worse, your staff knew it first. One of your family members is just not making the grade in your company. Other relatives had touted your brother-in-laws daughter as the ideal candidate for an opening in the firm. And she had always seemed like a bright and capable young woman. Relatives can work out well in key positions when theyre placed in roles that suit their skills. But when a family member is not cutting it, senior management may have to make a sensitive decision.
ou know it

Where did this go wrong? The hiring process is a key factor in whether a relative will thrive in a family company. As with any candidate, three things must be considered: qualifications, experience and fit for the role. Unfortunately, when assessing relatives, family business leaders often ignore hiring guidelines; they may feel compelled to give a family member special consideration. Many have an unspoken two-org-chart structure: one chart for family, another for the rest of the workforce. For family members, desirable roles are assumed, promotions expected and job security assured. That rarely sits well with the rest of the staff, whose ascension is usually merit-based. To avoid having to dismiss an underperforming relative, establish a hiring process of equals, no exceptions. A onesize-fits-all policy eliminates assumptions that the right last name guarantees a plum job. That means enforcing hiring systems that everyone must adhere to. If theres a spot to fill,
Tish Squillaro is managing partner and Ceo of Candor Consulting (www. candor-consulting.com).

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you feel that dismissal is the only option. You may learn ning and throughout the process, include the family that others share your point of view. Your goal is to gain members immediate supervisor, who likely will offer you buy-in and support for your decision, even if youre alone valuable support and added ammunition. But dont be in your impressions. Expect that some will not share your surprised if the failing relative plays the family card. opinion, particularly if different branches of the family Weve found it beneficial to have a senior family member are involved. Explain that company must operate like a and the persons immediate supervisor join forces to prebusiness, and that everyone who works there sent the business case for must add value and contribute. Clarify why dismissal. In that instance, Explain that company whats in the companys best interests serves make sure the manager is a everyone. credible, respected employmust operate like a You might also establish a Chief Relationship ee, whose observations business, and that Officer, a family member who is responsible will be valued. Obviously, everyone who works for providing business-focused information to managers must have the relatives. Establish a policy of frequent compower to make decisions, there must add value munication with family members. and other family members and contribute. Communicate clearly with the person should respect that. in question. As soon as you sense that you Stand your ground. may have to let a family member go, begin a dialogue. It takes a cool head to make the right decision when Outline the poor performance in detail. Often family reversing a family hire. And it takes a thick skin to back members behavior improves when they realize that hav- up your decision in the face of requests that you reconing relatives in high places does not mean lifelong job sider. The key is to stick to your message. Reiterate the security. If the situation is beyond repair, reiterate why points you established in your early communications dismissal is needed. with the other family members and the persons superior. It may be best to give the person the opportunity to Dont waiver or equivocate. Hold firm to what you know resign. If so, suggest that he be the one to inform the is right for the business. family, and present the resignation as his decision. Later, Even if a family fight ensues, emphasize that this was a you could tell your staff that Jim has elected to leave the business decision, and that you are responsible to people company to purse other opportunities. outside the family as well. No one, family member or not, Include the persons supervisor. From the begin- benefits from prolonging a bad situation. Share concrete

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examples of what happened. Bill mismanaged a few situations on the same account, and as a result, we lost a client. We cant afford to let that happen again. Let your family know you tried repeatedly, but there just was not a good fit. Family life after a firing Family gatherings can be strained after a relative leaves the family enterprise. But as much as possible, its best to put a wall between church and state. Leave this situation at the office, and encourage everyone else to do the same. Chances are that your relatives are feeling uncomfortable, too. Its best to normalize family relations as soon as possible by demonstrating that you would like to maintain all your relationships as they were. Continue going to family functions, and model with your behavior that life outside of the office should proceed as it always has. Dont expect healing or understanding on the first goround. Try at least three times to connect with a family member who may be angered by the firing. Just remember, its more about ego and emotion at this point. Expect to listen and console at first, before you start explaining. Show that you are sincere in your concern and convictions, FB and make it clear you believe you did the right thing. n processes and policies affecting how a family business is managed). Implication: Teaching family values and professional ethics to the next generation equips future leaders with a sense of responsibility and the ability to differentiate right from wrong. The next generation of leaders will then act in a manner consistent with the preferred workplace behaviors and will integrate family values with other desired management practices. Attaining deep pockets and warm hearts It is important to maintain high levels of family capital to encourage further accumulation of financial capital. The current perception that professionalism is the key to longterm success in family businesses is misguided. Without accounting for family capital, professionalizing a family business will be equivalent to playing Russian roulette. As the preceding case examples have demonstrated, family business success of depends on achieving balance between strong financials (deep pockets) and family capital (warm hearts). By monitoring the level of family capital on top of financial performance, family businesses can keep the hearts of their family members warm and the FB pockets deep, thereby ensuring long-term continuity. n family members need to envision many different events and scenarios. Mostand possibly noneof these will ever occur. Thinking about these scenarios can easily take you past your comfort zone. But if a crisis hits, it quickly becomes evident that investing the time in conducting these exercises returns major dividends to family business owners and managers. Once a crisis is upon you, it is difficult to tap the creative resources of the business owners and managers because they are so focused on attending to the added burdens imposed by the crisis. With scenario plans in place, family members can move forward because they have already thought through potential actions and their consequences. A crisis is going to be hard no matter what, but with some thoughtful risk management planning, the FB family will be well positioned to manage it. n

Professionalism can entail risks in family firms

Continued from page 21 an asset to family enterprises. It comes in three critical forms. 1. The business connections and knowledge networks established by previous generations of family managers. Implication: The next generation of family members can tap into these connections and networks, thereby fast-forwarding business success and ensuring business continuity. The new generations avoid making major mistakes by learning from their forefathers experiences. 2. Family rights and obligations. Rights refers to the power to make business decisions. Obligations refers to the responsibility of ensuring both the financial and the emotional well-being of other family members. Implication: Meeting ones family obligations maintains the fabric of familial relations and allows objective business decisions to be made with minimal opposition or ill feelings from family members that can threaten continuity of the business. 3. Family values and family governance (the set of

Risk assessment should include estate plans

Continued from page 23 estate plan? Where does Grandpas life insurance go? For each of these questions we plotted out a half-dozen different scenarios, possible actions and potential impact. Some were good, some bad. Some were based on the outcome we wanted; others were based on what we feared. Our outline allowed us to prepare for a potentially devastating circumstance that would have been difficult to predict: the existence of a buy-sell agreement that would have blocked our ability to recapitalize the company. Proactive risk management is a process that at the outset may feel like chasing shadows. During this process
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A d v i s e r s Fo r u M
to Secure and Perpetuate Your Family and Your Business, 2005). A constitution also engenders pride in the family and its business by connecting past, present and future generations with each other. Purpose and form Depending on the particular family, its business, its stage of development and the family members desires, a constitution can take many forms. It can be either a short document or a very long and complex one. Traditionally, a constitution serves the following main purposes: 1. It documents the mission, values, philosophy and principles that govern the family and its business, including the struggles of past generations. 2. It outlines the businesss strategy and its long- and short-term goals. 3. It defines dispute resolution processes to deal with potential conflicts affecting the business and the family. 4. It defines the roles, composition and powers of key governing and other constituencies of the business, including key management, directors, shareholders and family members. A constitution is typically a formal, written document (or set of documents) that is reviewed, acknowledged and signed by all family members involved in the business. However, it is generally not a legally binding agreement. Rather, it is a statement of principles and guidelines for the business and the family members relationship with the business. In effect, a constitution creates a moral obligation among the family as relates to the business. Being morally bound in this way signifies the commitment of each family member to preserve the familys legacy and grow the family business for the benefit of future generations. Despite not being legally binding itself, the constitution could include or refer to other legally binding documents. For example, the constitution may suggest that each family member be a party to (if applicable) premarital agreements, employment contracts, shareholders and buy-sell agreements and estate planning documents. The constitution is not intended to alter the provisions of existing governing documents that provide for the legal structure and governance of the company (e.g., certificate or articles of incorporation and bylaws)and this should be noted in the text of the constitution. The process of creating a constitution is a helpful exercise for a family business. It forces the involved famFrederick D. Lipman ily members to discuss and and Linsey B. Bozzelli define their shared vision are partners in the and come to a common Philadelphia office of understanding as to how Blank rome LLP. Lipman to document this vision, as is also the author of The well as any other matters Family Business Guide addressed in the constitu(Palgrave Macmillan, 2010). tion. Again, depending on

A constitution is a tool to preserve a familys legacy

By Frederick d. LipmAn And Linsey B. BozzeLLi

and their businesses grow over multiple generations, the number of individuals involved in a family business naturally increases, family members expectations regarding the business may diverge and related conflicts may arise. An important way to manage and deal with these types of contingencies is by creating a document commonly called a Family Business Constitution. Although constitutions are often written about and discussed by family business advisers, few family business owners have taken advantage of this useful tool. However, those families who have created and implemented a constitution have found the document to be instrumental in preserving the legacy of the business and helping to sustain the enterprise for future generations. Professor John Ward, co-director of the Center for Family Enterprises at the Kellogg School of Management and author of several leading books on continuity in family businesses, describes a family business constitution as a comprehensive articulation of philosophy, principles and policies for the future that balances and synthesizes the welfare of family, owners and the business, [and] is among the most important steps a business-owning family can take to secure and strengthen its business and, most preciously, its family (Daniela Montemerlo and John L. Ward, The Family Constitution: Agreements
s families

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the family, its business and the management and gov- addressed very simply or with much complexity. ernance structure, this process may be very simple or It is important that any constitution be considered a very complex. For this reason, most families choose to working, flexible document capable of moving with the engage an objective outside adviser with experience in times. It should be regularly reviewed and updated to creating family business constitutions to lead and drive ensure that it remains relevant and to reflect any changes the process and, in some instances, to serve as a refer- that time and circumstances necessitate. However, ee. Regardless, in most instances, it the constitution should also make takes a family several months to creclear that any changes made to the A family business ate a workable business constitution document should be consistent with that all involved parties are willing to the intent and goals set out in the constitution creates a sign. constitution.

moral obligation among

Specific provisions A family business priority the family as relates to The specific provisions of a constiA family constitution has been the business. tution are unique to the family and shown to be an important tool in prethe business, but a constitution ususerving and honoring the legacy of a ally begins with a statement or preamble relating to the family business for future generations while also definmission, values, strategy and philosophy of the business ing the strategies and goals of the business. It also serves as well as statements describing applicable history, life to engender pride and engagement in the strengths, talexperiences and traditions. The remainder of the consti- ents and sacrifices involved in the formation and growth tution then lays out rules and regulations to be used to of the business. While a constitution may not prevent govern how future generations should run the business conflicts, it can establish a way to manage and resolve and treat each other. These rules and regulations can them, as well as a way to define the roles of individuals cover any number of matters, including the following: involved in the business. Each family business should 1. Composition and rules of conduct for the governing treat the creation and implementation of a constitution FB bodies of the business (which commonly include a tra- as a high priority. n ditional board of directors as well as a separate advisory council made up of only family members). 2. Leadership and succession plans. 3. The hiring, compensation, evaluation and termination of employees who are family members. 4. The identification, development, training, appointment, evaluation and termination of management and members of governing bodies. 5. Policies relating to communications and disclosures between the business and family members. 6. Processes and procedures relating to the resolution of disputes among family members. 7. The rights and obligations of shareholders and provisions relating to stock ownership, including benefits available to family shareholders not active in the business. 8. Guidelines relating to retirement, including retirement age and other matters. 9. Stock buy-sell processes and policies (including detail as to certain triggers, such as death, disability and termination of a shareholder). 10. Guidelines relating to the sale of the business or other exit strategies. 11. Policies relating to premarital agreements and estate-planning matters. 12. Policies regarding the provision of family financial support. 13. Policies regarding ownership and management by non-family members. 14. Procedures for amendment of the constitution. As is likely evident, any of these matters could be
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A d v i sEr s Fo r u M
Revenue Service data, the number of businesses filing tax returns as C corporations has declined almost 16% over the past three decades, while the number of businesses organized as partnerships or LLCs has increased more than 55% over the same period. As the owners of older family-owned C corporations begin to contemplate various exit strategies, such as a sale or transition to the next generation of owners, the corporate form poses several problems: A sale of the corporations assets will create a double level of tax on capital gainsonce at the corporate level and again when the assets are distributed to the By Jeffrey A. MArkowitz shareholders in a liquidation of the corporation or as a And Christopher A. dAvis dividend. state tax freeze techniques offer great flex Gifts of valuable corporate stock are subject to federal ibility for the senior generation to protect and gift tax at rates as high as 35%. oversee business operations as the younger gen The owners of a rapidly appreciating asset, such as eration eases into operational control. The owner a successful small business in any form of entity, face of a successful family business can use an ever-increasing estate these techniques to transfer appreciating assets tax liability as the value of A drop and freeze to the next generation or to key employees. their estate increases. The goal is to maintain the value of the busitransaction maintains The drop and freeze ness while avoiding a double level of corporate the value of the business solution taxation and minimizing gift and estate taxes. There are a variety of ways to structure an Many small businesses use while avoiding a double estate freeze, such as recapitalizing the busithe drop and freeze translevel of taxation and ness, setting up a grantor-retained annuity action to solve these probminimizing gift and trust or making an installment sale to a trust lems. In this transaction, or family member. Although the adoption of an existing C corporation estate taxes. any transfer technique must depend on the contributes its operating specific circumstance of the transferring busiassets to an LLC or partness, one variation of a recapitalization, often called a nership in return for a frozen partnership interest. As drop and freeze transaction, is designed for owners of part of the transaction, two classes of equity are created closely held businesses, especially those organized as C in the partnership: (1) a preferred interest that is frozen corporations. in value and pays a fixed and certain rate of return, with little participation in equity growth; and (2) a common The C corporation conundrum interest that enjoys all of the income, growth and appreMany small and family-owned businesses are organized ciation above and beyond the preferred return. as C corporations, but there are more tax and non-tax For estate tax purposes, this technique can effectiveadvantages to being a limited liability company (LLC) ly freeze the current value of the preferred business or partnership. Consequently, according to Internal interest within the owners estate. The common interest transfers the desired portion of the appreciation in the business to family members and employees at a reduced tax cost. The common interest is generally structured without voting rights and with restrictions on its Jeffrey A. Markowitz transferability. As a result, (left) is a principal and the common interests have Christopher A. Davis valuation discounts for is an associate in the Tax lack of control and marketand Wealth Management ability, allowing them to group at Miles & be sold or transferred at a stockbridge P.C. They are lower value. based in the law firms

A tax-efficient way to transfer your business

Baltimore office (www. milesstockbridge.com).

Step-by-step While the procedures in

30

Family Business March/April 2012

any specific case must be tailored to the facts of the business and the needs of the transferor, here are the steps in implementing the technique:

LLC at a nominal amount. The result is an effective and tax-efficient transfer of wealth to younger generations or key employees.

1. Transfer assets to the LLC. The existing C Gift tax issues corporation contributes all of its operating assets to a Any succession planning strategy, including the drop wholly owned LLC in exchange for 100% of the mem- and freeze, must comply with Chapter 14 of the Internal bership interests in the LLC. Initially there are no tax Revenue Code, which provides that the transaction must consequences, because the LLC is wholly owned by meet certain tests in order to be considered a bona fide the corporation. The LLC now owns all of the business transaction and assets necessary to conduct the corporations not a taxable gift. That is If common interests are business. Owners may consider a Subchapter especially so when family S election for the corporation as part of this members receive interests issued or sold to key restructuring. in the LLC, regardless of employees at the same whether the LLC common 2. Assess the asset value. After the corinterests are purchased for time as they are issued porations assets are transferred to the LLC, fair market value or given to family members, and the value of the assets is assessed to determine for no consideration. if each interest transfer is the potential gift tax consequences of a gift or In general, the value sale of the LLC interests to family members. of the common interests commensurate with the The LLC will be treated as a partnership for must be at least 10% of the recipients role in the LLC, tax purposes when the interests are later transtotal value of frozen or ferred to family members and employees. preferred interest. Thus, if there is less likely to be the value of the preferred gift tax liability. 3. Structure the preferred and common interests in the LLC is $10 interests. After the assets are valued, the two million, then the common LLC equity classesthe preferred, or frozen, interest interests must be valued (for gift tax purposes) at a minand the common interestare set up. The preferred imum of $1 million. Chapter 14 also requires that the interest must generally carry a preferred return that common interest transfer: entitles the holder to a priority payment of the LLCs Is a bona fide business arrangement. cash flow. The preferred return would have priority over Does not transfer the assets for less than full and adeother distributions and would be paid to the corporation quate consideration. first. One disadvantage of the drop and freeze is that Compares with similar arrangements that would not this preferred return is subject to the corporate double involve family members. level of tax. As a result, many LLCs make the preferred All three of these tests are presumed to be met if the return as low as possible without its being commercially agreement is only between unrelated individuals, such unreasonable. as non-family key employees. If common interests are issued or sold to key employees at the same time as 4. Begin buying down the corporation. The own- they are issued to family members, and if each interest ers begin a gradual buy-down of the corporations equity transfer is commensurate with the recipients role in the through allocations of the LLCs cash flow. This process LLC, there is less likely to be gift tax liability. However, attempts to freeze the taxable value of a business with- if family members receive preferential treatment, it is in a taxpayers estate so that future appreciation is trans- more likely that at least a portion of the equity grants ferred to family members and employees free of tax. would be considered a gift. Using the asset value established when the corporations assets were transferred to the LLC, this invested capital Looking toward the future amount would be paid down over time as the stockhold- The partnership drop and freeze must be carefully strucers of the corporation are gradually bought out. tured to comply with the relevant laws and regulations in order to avoid adverse gift tax consequences. It should 5. Complete the asset transfer. During the buy- be done in consultation with a competent legal adviser. down, the corporation continues to receive a preferred However, if done correctly, the estate freeze transfer return as described above. However, as payments in can be accomplished while minimizing gift tax on the excess of the preferred return are made to the corpora- asset appreciation. The drop and freeze can thus be tion over time, its invested capital is bought down until an effective strategy to preserve hard-earned financial reaching zero (or some other minimal level desired by assets and ensure that the family business is well posiFB the owners), and the corporation is bought out of the tioned for the future. n
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31

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SPECIAL ADVERTISING SUPPLEMENT

Guide to Wealth Management Services

ealth management

incorporates a range of services,

including investment management, trust management, estate planning, private banking, taxation advice, phil-

anthropic planning and family office services. Advisers who understand the concerns of business families can help you establish a plan that meets your objectives for the distribution and preservation of your wealth while maintaining harmony among your heirs. They know that emotions play a role and can offer a knowledgeable outside perspective. An experienced wealth management adviser can help guide you through the thought processes that will enable you to arrive at a plan that incorporates your familys values and can help educate your next-generation members on proper stewardship. When significant life-cycle events occur in your family a birth, marriage, divorce, disability or death, for example your adviser will recommend appropriate adjustments to the plan.

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The only investment opportunity that succeeds in every market environment

iven todays persistent market volatility and economic uncertainty, many families are focused on how to do the best job of investing. Of course, setting the right strategy and choosing the best managers are critical to family success. But that is not enough. More than eight decades of working with families has taught us that the investments you make in preparing your family to work together are of paramount importance to your familys success across generations. Families who sustain their wealth over long periods of time have a way of working together that evolves to accommodate

an expanding group of decision-makers and the increasing complexity of their wealth. These successful families invest time and human capital with the goal of: Developing leaders who have the capacity to share power Defining a suitable decision-making process Creating strategic plans that anticipate and embrace change Communicating as openly as possible Educating family members through an intentional process Attracting active engagement from family members Fostering collaboration among family advisors to get the best advice There is a well-known cycle that families experience as they transition from the generation of the wealth creators to the generations of wealth inheritors. Wealth is created by the first generation, which sets the groundwork for how the family operates. This single leader has literally earned the right to define the operating principals for the family. He or she is comfortable making decisions, is future focused, has learned by doing over time, is very engaged, and has developed a personal style for working with advisors. The next generation will typically have to operate very differently in order for multiple decision-makers to effectively manage an enterprise (business, foundation, or liquid wealth) that they didnt create. They not only need to share leadership, but also need to have the opportunity to gain the experience and skills required to be good decision-makers. Of course, this is easier said than done. The chart lays out seven family operating principles. Many wealth creators naturally function on the left side of the chart. In our experience, families flourish when the wealth creator, in concert with the next generation, evolves to operate mostly on the right side. What investment do we recommend to help you achieve this goal? Find ways to use family resources so that the next generation can take small but meaningful risks, learn financial skills, develop as decision-makers and leaders, and gain experience working across generations. The return on this investment might be difficult to quantify in the short run, but it has a high probability of paying off over time. So why dont more families make this investment? There are three main reasons:

How we work together matters: 7 Family Operating Principles

In our experience, families flourish when the wealth creator, in concert with the next generations, evolves to operate mostly on the right side.
1. Leadership Single decision-maker 2. Decision-making Loosely defined 3. Strategic planning Static 4. Communication Need-to-know 5. Education Reactive 6. Engagement Limited 7. Advice Isolated Shared power

Well-defined

Dynamic

Open

Intentional

Active

Collaborative Source: Pitcairn

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1. The wealth creator enjoys running things 2. The next generation does not understand that their engagement is critical to family success 3. Shifting family operating principles takes patience and hard work Maybe your family is ready to get started, or maybe you are ready to take some steps on your own. If so, here are some ways to get going: 1. Begin a conversation. Use the 7 Family Operating Principles chart to figure out where you think your family is today. Challenge yourself to think of examples that both confirm and refute your initial ratings. This may make it easier to engage in a conversation and be open to hearing ratings that differ slightly or significantly from your own. Then, share this chart with other members of your family; ask what they think. 2. Read. There are many helpful books and articles that provide insight and advice to families about how to work together to sustain wealth across generations. Here are four classics we turn to again and again: Family Wealth by Jay Hughes The Compact Among Generations by Jay Hughes Wealth in Families by Charles Collier Family Legacy and Leadership by Mark Daniell and Sara Hamilton 3. Engage a resource. Get in touch with us! Pitcairn has a deep bench of resources, both internal and from our network of family advisors, who can help you and your family set and achieve some specific goals. Even in the best of times, the challenge of sustaining family wealth across generations can be trying. A period of prolonged economic stress can multiply the challenges many times over. But there is a time-tested way to increase success: Investing in your family. We challenge you to start this new year by considering how your family operates today. Are you satisfied with the preparations you and your family have made to enable the next generations to work together effectively? If not, now is the
Guide to Wealth Management Services wm3

time to sit down with your family and your advisors and work toward achieving that success. Dont wait. And dont worry; we are here to help you start the conversation. About Pitcairn Pitcairn works with multi-generational families, single family offices, and their advisors filling one need or providing comprehensive solutions. Since its founding as a family office in 1923, the firm has successfully transitioned wealth across multiple generations of families through a combination of effective planning, thoughtful governance, a commitment to education and strong investment results. For more information, contact Rebecca Meyer, Managing Director at 800-211-1745 or email clientservice@pitcairn.com.

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Our Firm
Hawthorn, one of the countrys largest and most successful multifamily offices, offers truly integrated wealth management services by combining investment management with tax, financial planning and estate administration, as well as personal administrative services.* We know that at its heart, multigenerational wealth management is about matching strategies with aspirations, and that making sound investment decisions is key to meeting your financial goals and securing your legacy for future generations. Our unbiased and independent advocacy is dedicated to safeguarding wealth and aligning assets with family values, lifestyles and aspirations. We are committed to exceeding expectations, building trusting relationships and acting as experienced guides for the next generation.

AT A GLANCE
Highlights: Hawthorn is a member of The PNC Financial Services Group, Inc. (NYSE: PNC), and one of the largest and most successful multifamily offices in the United States.* Year Founded: 1991 Clients Served: Over 500 Relationships Client/Advisors Ratio: 15:1 Assets Under Management: $21.3 Billion** Trust Assets Under Administration: $33.3 Billion** Primary Services: Wealth Strategy, Fiduciary Services, Investment Management & Consulting, Private Banking, Custody & Custom Reporting, Personal Administrative Services

Our Strengths
Honesty, objectivity, expertise, execution and a comprehensive, yet scalable approach are all crucial factors and the hallmark of Hawthorn. With the discipline to adhere to our investment philosophy and the flexibility to keep pace with evolving objectives, we emphasize building a relationship with you and your family that will deepen over time. From investment consulting and estate planning, to family foundations and multigenerational trusts, our family office services span a broad portfolio of financial interests.

execution, Hawthorn is committed to handling the complex financial responsibilities of your wealth so you and your family can spend more time enjoying it.

Our Investment Philosophy

Hawthorn believes that the growth and protection of capital is best achieved through a fully integrated, diversified, valuation based and tax-aware approach. Hawthorns proprietary asset allocation and risk modeling enables us to build portfolios of noncorrelated assets. This helps minimize volatility while increasing the probability of achieving long-term portfolio objectives. Our wealth strategy and fiduciary services also ensure that tax, financial, estate planning, insurance and philanthropic issues are identified and articulated so that portfolio management decisions are optimized to meet personal goals. This approach gives us the insight to help maximize financial performance today and the foresight to help preserve wealth for generations to come. *Bloomberg Markets, September 2011 **Information as of December 31, 2011

Client Team
Establishing a lasting legacy requires a well-conceived plan. You need someone to help navigate the myriad of financial, estate and tax planning issues that will impact the ultimate success of your plan. We help preserve wealth by providing some of the most talented and experienced advisors in the business. As a Hawthorn client, you have access to a team of professionals dedicated to helping build, maintain and protect your wealth. Your Hawthorn team works with you and your other advisors to craft a wealth plan and execute on all facets of the plan. The client service team is dedicated to constructing customized plans; providing transparent and comprehensive reports; and offering a robust technology platform to leverage both regional and national resources. With a diligent focus on service and

Hawthorn is a registered service mark of The PNC Financial Services Group, Inc. (PNC). Hawthorn provides investment consulting, wealth management and fiduciary services, certain FDIC-insured banking products and services and lending of funds through the PNC subsidiary, PNC Bank, National Association, which is a Member FDIC, and provides certain fiduciary and agency services through the PNC subsidiary, PNC Delaware Trust Company. Insurance products and advice may be provided by PNC Insurance Services, LLC, licensed insurance agency affiliates of PNC, or by licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate will receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. Hawthorn and PNC do not provide legal or accounting advice and neither provides tax advice in the absence of a specific written engagement for Hawthorn to do so. Investments and Insurance: Not FDIC Insured. No Bank or Federal Government Guarantee. May Lose Value. 2012 The PNC Financial Services Group, Inc. All rights reserved.

wm4 Guide to Wealth Management Services

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Prowell Financial Management

25 Years of Serving Large Family Businesses

e are proud to be

a sponsor of the upcoming vice may be of interest to others. We work solely with owners of large family enterprises Family Business Transitions East Conference in Orlando. We salute those of you making the ranging from the very dynamic first generation facing transfer commitment to address the issues business issues for the first time, to a fourth generation global enterfamilies face when dealing with transition planning. We were prise dealing with a different set of family and business issues. introduced to Family Business Magazine by a client, a second Our experience gives us an understanding of family issues that generation business with 24,000 employees. They think our ser- shape transition planning. We know you have to deal with: versus good family business planning problem, keep the business, give my non-active kids something other than Technical Issues: Family Issues: the business, and leave something to transfer of ownership How do we maintain control and trans- charity? fer assets? Who gets what? Do we treat voting control Tax advice suggests I leave my assets to trustee selection heirs fairly or equally? Is equal fair to my spouse, which would include control the kids in the business? trust location of the company; does this make family How will the expectations and conflicts buy-out agreements sense? Does it make business sense? of our inactive and active kids play out wills and gifts Is it fair to burden my spouse with this when were gone? How do I protect the estate and GST tax issues responsibility or role? business from a childs divorce or legal complexities of life insurance problems? Our Role: valuations how to take advantage of the 2012 Im wealthy, but do I have enough if I To understand what your plan is today, increased tax-free gifting limit transfer the business? what you want for the future and help you close the gap. weighing traditional estate tax advice How do I overcome the estate tax

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opportunities multiply
Wells Enterprises, maker of the Blue Bunny ice cream brand, has ambitious plans to grow way beyond $1 billion in sales. To help the company achieve that goal, family members restructured management and the board, putting the needs of the business first.
By Deanne Stone
its brand name, Blue Bunny, as well as licensed ice cream products for major U.S companies. The Wells familys commitment to preserving and growing its business, which included making bold changes in family management and the board of directors, has allowed it to gain a strong foothold in the hugely competitive ice cream industry. The U.S. market for ice cream and related frozen desserts reached $25 billion in 2009, and the giant multinational companies Nestl and Unilever control half of all sales. Wells is a distant third with about a 5% market share, yet over the past three decades it has managed to double its revenues every ten years. Mike C. Wells, the companys third-generation CEO and president, says Wells intends to double its size again in the next decade, although he admits that jumping from $1 billion to $2 billion in sales will be more difficult than going from $500 million to $1 billion. Our goal is to be the No. 1 ice cream company, says Mike. We may not be able to beat Nestl and Unilever in market share, but we can be No. 1 in quality and customer service.
ells

Blue Bunnys

Enterprises Inc. turns 99 this year, and it has plenty to celebrate. Beyond surviving for nearly a century, the company has achieved an enviable record of growth. Wells is the U.S.s largest family-owned and -managed ice cream producer. In 2006 its sales passed the $1 billion mark, placing it in a select group of family firms with revenues of that size. Located in Le Mars, Iowa, Wells manufactures more than 500 ice cream flavors and frozen novelty products under

Two generations of partners

Fred H. Wells founded Wells Dairy in 1913 in Le Mars, Iowa. He started by delivering milk from a horse-drawn carriage; later, he produced ice cream. 44
Family Business March/April 2012

Fred H. Wells founded the family enterprise in Le Mars in 1913. He started

From left: Doug J. Wells, Sue Wells Sargeant, Mike C. Wells, Greg A. Wells, Gary M. Wells, Michael J. Wells

off delivering milk from his horse-drawn carriage and later began producing ice cream with his four sons. The popularity of their product encouraged Fred and his brother, Harry C. Wells, to set up a partnership in 1927 to distribute their ice cream in Sioux City, about 25 miles from Le Mars. Harrys son, Fred D. Wells, also joined the company. One year later, the company sold its Sioux City distributorship to a competitor, along with the right to use the Wells name. When the brothers decided to resume selling ice cream in Sioux City in 1935, they had to create a new brand name. The winning entry in their Name That Ice Cream Contest was Blue Bunny, inspired by a local department stores Easter window display featuring colorful rabbits. The post-World War II economic boom triggered a new era for Wells Dairy. Recognizing an opportunity to take its business to the next level, it made two major investments. In the 1950s, it built a new facility in Le Mars for manufacturing ice cream products; in 1963, it constructed a fluid
photo: Wells enterprises, inc./Melissa sieja

milk processing plant. The first generation had established the partnership model of leadership, and when the second generation took over in 1954, it followed suit. The new partners were Fred D. Wells, the son of Harry C. Wells, and his four cousins, Harold R., Roy F., Harry L. and Fay R., the sons of Fred H. Wells. In 1977, the company incorporated under Iowa law as Wells Dairy Inc. With the death of one second-generation partner and the retirement of another, the ownership and management of the company fell to brothers Roy and Fay and their cousin, Fred D. Wells. The partnership succeeded, says Fay Wells son Doug J. Wells, because his father and uncles were willing to work six and a half days a week to grow the business. They had a lot of respect for one another and recognized each others talents, he says, They could fight like cats and dogs, but they always found a way to reach consensus. Also working in their favor, he says, was their knowledge of both the fiwww.familybusinessmagazine.com

45

nancial side of the business and the food science. They knew how to develop formulas and flavors, says Doug, and had a lot of fun coming up with the different combinations that made their ice cream so popular.

Later, he was promoted to an executive management position in the supply side of the business. Dougs brothers Gary M. and Dan W., and Mikes brother, Greg A., also followed similar trajectories in the company. Board chair In 2001, the second generation Expanding horizons stepped aside, passing the reins to Deborah Hylton says Wells Dairy entered a second pethe next generation. Gary was CEO, riod of ambitious expansion in the the restructuring reflects Dan was president of the procure1980s. It built a new facility for its ment group and Greg worked in the familys strength in growing fleet of trucks used to delivsales. Mike and Doug continued er milk around Iowa and added new embracing change and focusing on their areas of responcorporate offices. In 1983 it made sibilities, and in 2005 they were innovation. its first reach out of state when it named co-presidents. Mike was in bought a facility in Omaha, Neb., charge of demand, sales and marand remodeled it as a processing plant for milk, yogurt and keting; Doug oversaw the supply side. fruit juice. At the same time, it undertook a major project to The third generation continued the expansion of Blue enlarge its plant in Le Mars. The increased square footage Bunny into western markets. In 2003 it built an ice cream allowed Wells to double its production capabilities. Then, in manufacturing plant in St. George, Utah, with the capac1992, it built a second facility on the south side of towna ity to run two production lines of packaged ice cream of 900,000-square-foot plant with a freezer 12 stories tall. With different sizes. With three ice cream manufacturing facilithe completion of the second plant, Wells Dairy claimed ties in operation, Wells had the capacity to significantly the title of the worlds largest manufacturer of ice cream in increase production of its Blue Bunny brand and to become one location. The Iowa State Legislature dubbed Le Mars a licensee, manufacturing ice cream for other companies the Ice Cream Capital of the World in 1994. under their brand names. Wells had succeeded in making Blue Bunny a regional In 1988, Mike and his father, Fred, started shipping milk brand. Now with its large and sophisticated new facili- and ice cream from its facility in Omaha to a Wal-Mart ties up and running, the company store in Topeka, Kan., starting a launched an aggressive campaign business relationship between to expand its brand nationally. the two companies that continues Lansing Crane, the former chair today. We built our business with and CEO of venerable paper comWal-Mart one store at a time, says pany Crane & Co. Inc., joined Mike. We manufacture their store Wells board in 2010. Reflecting on brand ice cream, Great Value, and the companys growth, Crane says, they carry our Blue Bunny brand. The public thinks of ice cream as Thats part of our business model. a consumer product, but the heart We manufacture the store brands of of the business is superior manuother companies and, in exchange, facturing, innovation and a high dethey carry Blue Bunny in their gree of technology, and Wells excels Wells Dairy founder Fred H. Wells (left) and stores. As one of Wal-Marts top in each of those areas. his brother, Harry C. Wells. 100 suppliers, Wells had to develop The third generation started new technology to comply with the learning about the family business by working summer giant retailers mandates for inventory, safety and quality jobs as high school and college students. Mike Wells began controls. Wal-Mart is a demanding partner, says Mike, running routes for the dairy in 1977. After graduating from but its fair. college in 1981, he worked in sales in Omaha before returnWells has also built a profitable partnership with Weight ing to Le Mars, where he was named director of retail sales Watchers. In 2004, the weight-loss company approached and transportation and, later, executive vice president of Wells about developing new products under the Weight that department. Watchers label. Wells research and development departDoug Wells has fond memories of his first summer job ment designed and manufactured new frozen products that making ice cream sandwiches. After graduating from col- doubled Weight Watchers business in six years. Weight lege, he began working in quality control and production. Watchers and Wells are examples of good licensing part46
Family Business March/April 2012

ners, says Mike. The combination of our manufacturing capabilities and its strong brand name allowed Weight Watchers to build a much larger capital market.

A new leadership structure

The partnership model of leadership that had served the company well through most of its history came into question in the third generation. By 2006, Wells had become a billion-dollar company with a national reach. Family and non-family management engaged in long discussions about how Harry C. Wells (right) presents a $25 check to the winner of the Name That Ice Wells could best position itself to grow Cream Contest, George Vanden Brink, for his winning entry, Blue Bunny. and thrive in an increasingly competitive industry. In 2007, Mike was named CEO and president of Wells We knew the weaknesses of inbred family management, Dairy Inc. Gary, Doug, Greg and Dan Wells stepped down says Doug. We spent a lot of time identifying opportuni- from their positions. Gary, Doug and Greg, who had been, ties to improve and the additional professional expertise respectively, CEO, co-president, and senior vice president wed need to do it. Wells family owners brought in several of operations before they stepped down, still serve on the outside consultants to hear their perspectives and, along companys board of directors. with the companys professional managers, considered It was a difficult but necessary decision, says Mike. the mix of judgments and opinions. The final proposal to Given the challenges facing the company, we realized that change the management structure and reconstitute the our businesss needs were greater than the familys. We had board won shareholder approval. Under the new plan, to streamline our structure, and we started at the family Wells would have a CEO/president in charge of the busi- management level. Now Wells has the structure and disciness, hire more outside talent and add three outside direc- pline of a publicly traded company and the advantages of tors to the board. being privately held. Mike says that the transition was handled amicably but also acknowledges the sacrifices family executives made in stepping down. Doug, like all of the third generation, had spent his adult years working in the family business, and he says it was difficult to walk away. It wasnt my goal to retire at 55, he says, but sometimes you have to look at yourself in the mirror and ask what you want to do and whats the right thing to do. It was a critical time for the business. We couldnt only think of the family; we have responsibilities to our employees and to our town. Were the biggest employer here. Adding outside directors to the board was another critical building block in navigating the transition. The three new directors had either run family businesses or sat on family boards, and each brought experiences, conFrom left: Second-generation partners Fay R. Wells, Harold R. Wells, Harry L. nections and new perspectives that Wells, Roy F. Wells (sons of Fred H.) and Fred D. Wells (son of Harry C.). would enrich Wells thinking in movwww.familybusinessmagazine.com

47

ing forward. Deborah Hylton, president of Hylton Consulting in Chapel Hill, N.C., was invited to join the Wells board in 2008 and is now the board chair. The restructuring of management and board was not a reflection on the leadership of the other family members, she says, but rather a reflection on the familys strength in embracing change and innovation. Mike has a real passion for the business and its role in the industry, and the right combination of talents to lead the company.

Shareholders council

In August 2008 the board proposed setting up a shareholders council to facilitate communication among the board, managers and shareholders. The council would provide opportunities for shareholders to raise questions, learn more about the business and how it functions, and nurture pride in the family legacy. A group of shareholders sprang into action, forming a task force under the guidance of Jennifer Pendergast, senior consultant at the Family Business Consulting Group. Within a few months it had developed a charter and resolved the question of eligibility. Spouses and trust beneficiaries would have the same status as other shareholders. After getting approval from the shareholders, the council approved the slate of four candidates, representing two family branches and two generations, at its January 2010 meeting. Sue Wells Sargeant, the older sister of Mike and Greg Wells, is the councils chair. A retired nurse who lives on the East Coast, she had never worked in the business. I feel blessed to be the beneficiary of the hard work of family members whove been active in the business, she says. Now I have a chance to give something back. Sargeant works closely with Deborah Hylton, the board chair, to respond to shareholders requests. A survey showed that their immediate interest was in learning how to interpret financial statements. Sargeant and Hylton worked
48
Family Business March/April 2012

By 2006, Wells had become a billion-dollar company with a national reach. Family and non-family management engaged in long discussions about how Wells could best position itself to grow in an increasingly competitive industry.
Targeted efforts

with the Family Business Center at Loyola University in Chicago, which had developed a webinar on reading financial reports. In just two years, the shareholders council has accomplished what the board had hoped, Hylton says. Theres more family participation and a greater sense of family identity. But, Hylton notes, Its not once and done. The council helped us understand what shareholders want, but their concerns will change as the business changes. Now we have a mechanism for staying in touch. As the only daughter in the family, I wasnt expected to work in the business and I hadnt served on the board, so its gratifying to be part of it now, Sargeant says. Im really proud of being a Wells, and I love our ice cream.

In 2008, Wells sold its Le Mars milk plant to the Dean Foods Company and its dairy yogurt plant in Omaha to a Mexican company, Grupo LALA. In 2010, Wells changed its name to Wells Enterprises Inc. The new name recognized the family ownership of the company while ending customers confusion about whether the company still distributed milk. The divestitures also marked Wells new focus on expanding nationwide sales of its core businesses, ice cream and frozen novelty products. Over the past four years, Wells Enterprises has flourished under Mikes leadership. The company has set a new sales record and reduced its debt. (Mike declines to disclose current revenues but says they exceed $1 billion.) Mikes son, Michael J. Wells, is associate marketing manager of Wells retail brand. We are a great example of a family business that protected the family by putting the business first, CEO Mike Wells says. Shareholders are enjoying greater benefits because the company has accomplished great things. We made tough decisions in 2007, and FB weve been proven right. n Deanne Stone is a business writer based in Berkeley, Calif.

The founding brothers in the late 1800s. From left: Gregory P., Thomas D., Michael J. and Stephen J. Connolly.

Surviv al
aboard, the evolution is expected to continue.

through adaptation
Connolly Brothers Inc., a construction management company in Beverly, Mass., has endured hard times by reshaping its mission. With a fifth-generation member
By Dave Donelson

Brothers Inc., a fourth-generation construction management company noted at one time for the quality of its masonry work, has endured like one of the stone walls that track across the countryside near its headquarters in Beverly, Mass. What has kept the company in business for more than a century and a quarter? The secret is the struggle against adversity, says 91year-old Stephen Connolly III, father of the current owner and grandson of one of the companys founding brothers. Each of the four generations that have owned and managed the firm responded to adversityworld wars, depressions and collapsing real estate marketsnot only by working harder, but also by changing direction as often as necessary to keep the company afloat. Real estate and construction has provided a good livelihood for us, but its tough, says Stephen J. Connolly IV, 63known as Steve who is the companys CEO and current owner. Its cyclical, and a lot of people can find themselves overleveraged. You wake up and youre gone.
onnolly

At one time, Connolly Brothers had 500 workers slinging sledgehammers and shaping land with steam-driven graders all over the Eastern seaboard. Today it employs 35 people, who use computers to design sleek office interiors and manage dozens of specialized subcontractors working on commercial projects close to home. The business certainly isnt risk-free, but it made it through the recent financial crisis and the subsequent freeze on new construction. That was just another period of adversity that has marked the companys history. The Gilded Age and then a tarnished economy In 1848, 20-year-old Stephen Connelly sailed from Ireland to Boston and landed a job as a gardener on the estate of the Lyman family, where his brother, Thomas, tutored the owners children. Stephen married and eventually moved his wife and five children to Beverly, where he became superintendent of one Massachusetts Bays North Shore estates. Two of his sons, Stephen J. and Greg, landed a contract for road building near their home in 1884. Their
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eldest brother, Thomas, joined the firm two years later. The fourth brother, Michael, and their sister, Mary, werent active in the business. All three men worked at other jobs on the side as they got their company started at the turn of the century. Although they tackled a range of projects, the brothers specialized in masonry work. As time passed, they became contractors of choice for the elite families of Americas Gilded Age, working on grand mansions from Kennebunk-

When my grandfather came back from the war and joined the company, Steve Connolly explains, there was [company] stock scattered all over the place and a bunch of family members supposedly working for the company and getting a paycheck every week, but they werent doing much of anything. My grandfather spent most of his life buying out these little bits and pieces of stock. He consolidated ownership through a series of incorporations, buyouts and swapping of assets until the current company was formed. At that point, it was owned solely by his branch of the family. Gregs son, Stephen Connolly III, first worked for the company as a summer laborer in 1937, earning five cents an hour less than the lowestpaid hired hand. He remembers the tough times they faced. At one point, in a matter of a few days, he says, a tremendous number of contracts were canceled due to the economy. During the war, it didnt get better because the company was entirely a residential contractor and they werent building new homes. Also, no labor or materials were available. While he served in World War II, the company survived primarily by doing work for General Electric and Eastman Gelatin (a division of Eastman Kodak). Stephen Connolly III and his brother, Peter, bought out their sister when their father died. Later, Stephen III bought out Peter. When it Stephen J. Connolly at a groundbreaking ceremony at Beverly later became apparent that my uncles son wasnt Hospital. Nurses watch him from a balcony in the background. interested in the business, Steve Connolly explains, my father bought out his brother to beport, Maine, to New Yorks Hudson Valley, Long Island, come the first person to be sole owner of the company. and even as far south as Virginia. Top architects of the day like Frederick Law Olmsted, the designer of New Yorks A streamlined company Central Park, prepared the plans for projects the Connolly Steve Connolly, who had spent three summers working boys undertook. They did stonework at the restoration of for the company, began a full-time job there in 1967. He Colonial Williamsburg, a project backed by another of their worked in the office for six months before going into the clients, John D. Rockefeller Jr. Navy, where he served until 1971. It took me two days to They had a pretty good company most of the time, drive home from South Carolina, he recalls, but the next Steve Connolly says, although they almost bankrupted morning, my dad woke me up early and said, Youve been themselves a couple of times, too. screwing around long enough. Its time to go to work. By the end of their first year in business, the brothers Steve bought the company from his father in 1989 and had begun buying land, an activity that would continue began making changes almost immediately in response to throughout the companys history. One particularly lucra- conditions in the marketplace. tive acquisition was 400 acres of farmland in Topsfield, We stopped doing residential work and also stopped bidMass., which eventually became the source of gravel for ding work on the open market, Steve says. A few years railroad track ballastmuch of it going to build Bostons before that, I had started doing more in-house design-build North Station. When the gravel and stone ran out, the prop- construction management business. erty was sold. At the time of the transition, the company had about 175 From the World War I through the Great Depression and employees, most of them laborers and tradesmen. Now into World War II, the company struggled to survive. Its we have some equipment and have superintendents on interestsand management attentionwere scattered the jobs, but we use subcontractors mostly, Steve explains. among hard-to-find construction jobs, heavy equipment There are about 35 employees today, with more people in sales and rental, quarrying and property management. As the office than in the field. Annual revenues vary greatly; the economy floundered, the owners looked for opportu- the company expects to generate $30 million this year. nities throughout the Northeast. Leadership fell to Greg These days, Connolly Brothers typically has ten to 12 Connolly, Stephen J. Connollys eldest son and a World projects of various sizes under way at any given time. War I veteran. Theyre commercial and industrial projects with a bit of
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institutional work, but nothing for the public sector. slip into the drivers seat for a few minutes sometimes With the public bid laws, the mentality of the project when visiting a project site. managers, estimators and superintendents is contrary to I knew my son wanted to go to work for me, but I enthe way we want to run our business, Steve explains. You couraged him to do something else every summer, Steve can have 25 bidders on a project with extensive plans, but explains. When he was in his senior year, I suggested he the only way to make money on the job is through chang- talk to various companies to see what he might want to es and change orders and fighting and scraping your way do. He came to me in the late spring and said he wanted through the whole thing. to work for me. All of the firms work is done in the Boston suburbs (work An office building the company constructed for its own in the city usually requires union crews) for a limited num- real estate portfolio was in the final stages of planning ber of clients who bring the company back again and again. when Jay graduated from Boston College. It was a good On a dollar volume basis, Steve estimates that 70% of rev- opportunity for me to get into a project from start to finish, enue comes from repeat customers. IRA Motor Group, a he recalls. He attended permitting meetings and worked chain of auto dealerships, has contracted for some 25 proj- in the field as an assistant superintendent. He also worked ects ranging from completely new facilities to major reno- in the office, shadowing the project manager. I was hirvations over the years. One recently announced project is ing laborers that summer, Jay says. Hiring construction construction of a 32,000-sq. ft. manor house resembling a mansion originally belonging to William Loeb that burned down in 1987. The new building will contain offices for a Boston-based holding company, Affiliated Managers Group. Connolly Brothers worked on the original building when it was erected in the 1920s. In 2008, Connolly Brothers completed a 12phase interior renovation for MITRE Corporation. Connolly was able to completely gut a 130,000-sq.-ft. building; replace all mechanical, electrical, and fire protection systems; and refinish all interiors including dry wall, flooring, cabinetry, ceiling, and painting without disrupting the clients personnelwho continued to work in the building during the construction. The nature of the business has changed quite a lot, Steve says. When the economy was lousy, my dad would go back to the basics. Today, with the way the world has changed, thats a fatal strategy. You have to be changing all the time. The rate of change seems to be accelerating, too. In 2009, our business was way offwe did a third of what wed done the year before, Steve says. We did a little bit more than that in 2010. But things picked up significantly and we did as much work in the first four months of 2011 as we Three generations: From left, Jay Connolly, Stephen J. Connolly III and did all of [2010]. The economy hasnt picked up Stephen J. Connolly IV at a recent groundbreaking. that much, but many of our clients had put off projects until they got to the point to where they needed to laborers isnt exactly like interviewing investment bankmove. Its still not as robust as it was in 2007-08. ers, but youre dealing with someones career. At the same time, when the economy went south, I had to lay people Planning for transition off, too. Thats definitely the hardest thing Ive had to do. One of the next priorities for Connolly Brothers involves I think my dad had me do some of those things so I would training the fifth generation. Steves son, Jay, 27, is a proj- gain the experience. ect manager at the company with responsibility for several The Connolly family has made many such difficult decimultimillion-dollar projects. (Steves daughter, Page, 31, is a sions over the last century and a quarter, managing through property manager in Washington, D.C., and is not expected boom and bust economies by continually redefining their FB to join the family company.) companys mission. n I grew up in and around the business visiting job sites every weekend with my dad, says Jay. Hopping into ex- Dave Donelson is a business journalist and the author of cavators and backhoes is quite a thrill for a little kid. I still the Dynamic Manager Guides and Handbooks.
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Passing on the torch

without blowing up the family
Our succession processs began without a formal plan. I eventually realized that the do-it-yourself approach had lost traction on both the business and family fronts. Was it too late to create a proactive succession plan?
By JAck MAcBeAn
often refer to myself as the illegitimate third genera-

tion of Ostbye & Anderson, the Minneapolis jewelry manufacturer founded by my wifes family in 1920. My father-in-law never liked being a part of the company and discouraged me from joining. Yet after 12 years in other jobs and industries, I brought my experience and skills into the family business in 1978. As an only child, I naturally became self-sufficient, which developed into independent thinking and a do-it-yourself (DIY) attitude in business. These character traits continued to serve me well as I became company president and majority stockholder in 1988. I built a new factory, made a significant acquisition in 1993 and grew the company from a regional to national player. But in 2001, our business and industry took a major hit and I wasnt sure where I saw myself in the future. I wanted the company to recover but was unsure if I had the energy or the passion to build it back up. My independent streak had hit a roadblock. Unbeknownst to me, a DIY succession process started in the fall of 2002 as I neared my 60th birthday. I had no exit plan at that time and no clue that things were about to start happening on their own. After learning a series of lessonsthe hard wayI realized the DIY approach was no longer useful. Ultimately, pleasant surprises occurred in the process of passing the torch, but only after I opened myself up to professional help and peer guidance.

the possibility of a family succession plan. Too bad I never asked! Advice to other family business owners: Do not assume you know what your children think about the business. You have to ask. Engage family members in direct conversation or have an outsider conduct interviews. All family members must understand that discussing the family business does not guarantee any specific outcome for either the children or the business. I believe very strongly that it can be stifling for children to come into a family business immediately after school, before they have some real world experience and have gained a degree of confidence and independence. That background also allows them to bring some skills and knowledge into the family business. Equally important, this helps raise the problematic child/parent/boss relationship up a notch to the still challenging adult/parent/boss relationship.

Surprise #1: A successful son says, Make me an offer.

In the fall of 2002, as I started having concerns about what to do with the businesssell it or work until age 90I had a fateful lunch with my son Craig, then 34. He had recently been named U.S. Salesman of the Year at his company (among a sales force of 1,100) and was considering new opportunities. We met to talk over his rsum. As I reviewed it, I said something like, Our business needs a sales manager with your qualifications. His response: Make me an offer. I was taken aback, flabbergasted and totally shocked that Craig had considered working in our family business. (Again, I never asked!) This lunch was a pivotal moment for me. I was excited, but terrified, about bringing him into the business. I wrestled with this emotional conflict and internalized the decision. I didnt discuss it with my wifea major mistake! I never reached out for help and didnt consider the effect of the decision on our company, its management team or our family, especially Craigs younger brother, David. Only much later did I learn that David had always hoped that he would ultimately take over the family business.

Lesson #1: Those privileged to be part of a family business cant ignore the family.
My initial mistake was not recognizing the business as part of our family, whether or not anyone in the family was active in the company. In retrospect, I did not know how to incorporate the business into our family without sending a message of entitlement or expectation. I wanted my children to work elsewhere. It was important to me that both my sons had freedom to find their own careers, passions and independence. Because both my sons had developed highly successful and financially rewarding careers with multinational corporations, I assumed that neither would want to come into the business, which effectively cut off
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Family Business March/April 2012

Jack MacBean, left, with his son Craig, who succeeded him at Minneapolis jewelry manufacturer Ostbye & Anderson.

Advice to other family business owners: Before you decide to bring a family member into the business, create a family councileven if you dont think you need one yet. A family council provides a framework for educating the family about the business and addressing and resolving conflicts. It also offers an open forum to discuss opportunities, qualifications and desires. The goal is to prevent unintended consequences that, most likely, will have negative ramifications for other family members. It also can be a way of creating some fun family events.

Lesson #2: Family members and company managers get upset when owners make significant operating decisions independently.
A few months after my lunch with Craig and before the announcement of his new role as national sales manager, I came face-to-face with the guardian of our familys relationshipsmy wife, Lynneand knew I was in trouble. My son David and his wife were visiting for Christmas on the day that Craig and I had reached our agreement. I casually mentioned to Lynne that I was thinking of bringing Craig into the business. She was astonished and quickly
Photo: DaviD CarriCk

asked, What about David? She was loud, stong and clear: You may be responsible for the company, but dont blow up the family. David did not take the news well. He was highly qualified, but the reality was that his strengths mirrored his brothers in sales and marketing. Within our small company, there wasnt another opportunity for him. David was hurt, disappointed and angry. Simply put, David was devastated not to have even been asked. I have very few regrets in my life, but this one tops the list. I could have and should havehandled this decision so much better. Its a lesson I leaned the hard way, and I share the story often with family business owners as a way to help make amends. I also agonized over announcing Craigs appointment to our top managers. They had assumed my two sons were not coming into the business. During a managers meeting, I said I had hired a new national sales manager whom I felt was well qualified for the job. I passed out Craigs rsum with the name removed. As managers were reading the rsum, one of them said, Wow! Is this Craig? The general reaction was favorable; however, one individual,
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who might have been a candidate to take over my position as president, felt threatened and was visibly upset. That individual never adapted to Craigs being in the company and left within a year. Advice to other family business owners: Whether succession is a DIY or a planned process, it will be an uncomfortable time for everyone. Lack of communication and trust will further erode family and company harmony. Once the familys plans are in place, simply announce this to key managers and employees. Since 2002, David has moved from telecommunications to GE Healthcare, where he has worked for the past six years. He is very proud of his success with GE and is well recognized within the company for his accomplishments. Although they live in different states and have very busy professional and active family lives, David and Craig have maintained a good relationship, including a shared interest in running marathons.

proach, which had landed us squarely in survival mode. Steve Coleman of Platinum Group, a business consulting firm, helped Craig and me to work more effectively together and map out a strategic plan for long-term growth and profitability. This process identified a need for experienced managers in finance and manufacturing, and we decided to engage a search for A players. To address rising competitive forces, we opted to narrow the companys focus to strengths in mature markets. This strategy, in addition to investment in new technology and distribution channel resources, became the driver for change that would generate profitable new growth. Advice to other family business owners: The DIY approach saves money in the short term but will cost you in the long run. Ask for help before its too late, especially if you are at the point in life where your focus is on conservation and comfort in your own lifestyle, rather than investment and risk-taking for the companys sake.

Surprise #2: My sons leadership helped the business meet economic and industry challenges.
Our industry was going through challenging times in the post-9/11 era, but our struggles had started before that. People buy jewelry when they feel good and optimistic. We saw a 30% revenue decline in 2001 due to fear and uncertainty. Whats more, intensifying competition from global companies had eroded profitability, and the impact of the Internet was growing each year. I was delighted to see that Craig contributed not only leadership skills, but also big-picture thinking to guide the business to perform at a higher level. One of his first action steps was to develop a long-range strategic plan, which the company had never had before. This replaced my DIY ap-

Lesson #3: Transition is a natural, healthy event that can be good for the company and its leadership.
During this strategic planning period, Craig became involved in aspects of the company beyond sales, and I became aware that he was capable of running the business. A conflict developed between the two of us based on his higher expectations for the company vs. my comfort level. I wanted to suppport Craigs efforts but quickly realized that I didnt want to take on more work at this stage of my life. Although I still had not planned an exit strategy, I started to attend a business transition group out of curiositynot thinking it would affect me. Other owners shared their transition experiences openly. It took me a year to go from spectator to player as I gave myself permission to

Mapping out a productive transition

There are six dimensions to the journey.
Whats next for me? Its a common question among todays Boomer business owners and leaders. The key to mapping a productive experience in any transition is to know where youre goingto identify the next stage in your life and work. Based on the experiences of many leaders in transition, Platinum Group has identified six dimensions of life that can help point the way. 1. Family. Involve your family in the transition decision, and consider their needs. Action steps: Form a family council, hold family meetings and engage in long-range planning. 2. Finances. Balance wealth management with succession planning to meet family lifestyle needs going forward. Action steps: Obtain a business valuation, develop a buy-sell agreement, get tax-planning assistance and plan your charitable giving. 3. Business. Assess your businesss readiness for transition by evaluating its stability and predictable cash flow. Action steps: Develop business plans with timing and budgets. 4. Successor. Evaluate internal candidates and/or conduct an external search. Action steps: Plan to transfer leadership and inform key stakeholders of your decision. 5. Lifestyle. When planning how

By Steve coleman
to spend your time and energy after the transition, focus on your passions. Action step: Start by planning a sabbatical. This will also enable you to test internal candidates readiness for leadership roles. 6. community. Give back to leave a legacy. Action steps: Consider various ways to support the charities and causes you are most passionate about, through financial contributions and volunteer opportunities. Steve Coleman is a partner in Platinum Group, a business consulting firm based in Minneapolis (Steve. Coleman@thePlatinumGrp.com).

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Family Business March/April 2012

consider a transition. At some point I realized that transition is not a weakness and does not signal the end of life; its a natural progression thats necessary for a company to survive into the next generation. Once I started, I never looked back. Advice to other family business owners: Be open to resources and suggestions from experts in the field. You dont have to go through transition alone. Find a peer group where there is open, honest discussion about taking the next step. It can bring clarity to your succession planning, as well as encouragement.

ability of the business and ensure that everyone knows who is in charge.

Surprises continue: Moving from daily operations to ownership presents new options.
The sabbatical provided a runway for my next stage of life. In fact, my life had come full circle: I began work in 1965 with American Airlines at OHare and now I volunteer at

Surprise #3: Planning a sabbatical can be a helpful tool to test your management teams readiness to step up in the organization. It also can be a positive step in a business owners succession plan.
I initially decided to take a five-month sabbatical from the business in 2007 and return as an active chairman in the business. But I struggled with what to do on my sabbatical. I found myself building a long list of things I should do that became overwhelming. A peer suggested I instead think about what I could do, which took a lot of the pressure off and helped me become comfortable with enjoying myself. As I prepared to leave, I became My initial mistake was not recognizing the business as part of our family: more committed to not returning to Jack MacBean with his wife, Lynne, and sons David (left) and Craig. the business. I was now getting more and more excited about the best transition for the company. the Minneapolis/St. Paul airport with the Travelers AssisIt became apparent that my sabbatical was the blueprint tance Program. I am also exploring other ways to give back for elevating Craig to president and moving him into my to the community. In addition, I still enjoy consulting with office. I would not come back in a formal role or have an Craig on business issues as needed and attending periodic office in the building. company meetings as well as traveling, gardening, reading Craig had earned the respect of our employees, custom- and spending time with our five grandchildren. ers and suppliers; it was important to me that everyone see After a 40-year career, Im enjoying being an owner withhim as in charge. We called a company meeting (includ- out the concerns of daily operations. The business, now led ing local family members) on a Thursday and announced by the fourth generation, is well positioned for success in Craigs promotion to president, effective the next day. The the years to come, and we eagerly anticipate the companys short transition period was painless and could not have 100th birthday in 2020. The recent recession has been devbeen more successful. There was no time for staff to specu- astating for some businesses, but Craigs energy, focus and late or question who was in charge. In fact, there was leadership have resulted in revenue growth, product diverenthusiastic support immediately. The company moved sification and continued profitability for our company. forward and never missed a beat. While I proudly celebrate my accomplishments in Advice to other family business owners: A sabbatical can the family business, I am grateful for the freedom and help your management team to step up to new responsi- flexibility I now have to pursue other passions and FB bilities. At the same time, the senior leader who steps out opportunities. n of the company can get a new perspective and can plan new opportunities beyond the family business. Jack MacBean (JackMacBean@gmail.com) is the owner of Also, remember that business owners decisions have a Ostbye & Anderson, a family-owned manufacturer of bridal huge impact on the employees. When announcing a tran- and related jewelry serving independent jewelers throughout sition, be sure to send a strong message about the sustain- the U.S. and Canada.
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Multiple marriage
The family tree has lots of new branches. Because were building our families in so many different ways, estate planning is a lot more complicated than it used to be.
By JoE M. GoodMan

Multiple marriages tend to create multiple sets of children. Complexity increases when both spouses have shared children with more than one partnerwhich may, or may not, include the current spouse. Stepparents and stepchildren are now typically part of the estate planning equation. Children living in the home often have labels such as his, hers, ours or somebodys elses. Medically assisted procreation, of course, could have a wide range of ramifications. Families and their estate planning professionals must evaluate such situations on a case-by-case basis.

looks much different than it did 50 years ago. Divorce and remar- Common misperceptions riage have caused new branches to take root Estate planning professionals often hear the following and extend in different directions. Stepchil- statements from their clients. Comments like these raise dren are everywhere! a red flag. There have been other changes, as well. We have agreed to leave everything outright to each Consider the increased prevalence of medi- other. The surviving spouse will leave it equally to all of cally assisted procreation, and of acknowledgment of chil- our combined children. dren born out of wedlock. There are also more dynamic I love my wifes [husbands] children like my own. adoptions (grandparents raising their grandchildren owing My children are already well-provided for by the half to unstable family circumstances). Gay family members are of my assets I had to give to their mother [father] in our coming out of the closet in increased numbers, and many divorce. of them are forming family units complete with children. His [her] ex-wifes [ex-husbands] family is wealthy and Compounding these changes is the fact that people are will take good care of those children. living longer than they did 100 years ago. Typical U.S. family tree, circa 1660 1960 The two family trees shown here demonstrate the changes in the inAge stitution of family over the last = Female half-century. This new paradigm has 70-80 = Male dramatically affected estate planning concepts. Many family business owners are concerned about the effect of = Deceased 50-60 estate taxes, but tax considerations are not the only complicating factor. The simple will is going the way of the dinosaur. It is unrealistic to expect a form-driven document to be anything but a disaster. 30-40
he family tree today

Estate planning implications

Estate planning today means giving attention to three or more generations of the family on a simultaneous basis. Todays family is more like a group than a unit.
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Family Business March/April 2012

10-20

planning
I am scared to give [or leave] assets to my children can be important factors. A combination of stepchildren from my prior marriage because my ex-wife [ex-husband] and our children can have serious repercussions within will talk them out of their money. the relationship matrix. The death, incapacity or divorce of I want to keep my assets in the bloodline because my the biological parent will likely have serious repercussions father/grandfather would want it that way. in the ongoing stepparent-stepchild relationship. I dont want to include adopted children in my estate The standard will and trust phrase, If any child of mine plan unless I have a chance to know them. is not survived by children or other issue , will automati Stepchildren arent my grandchilAge = Female dren. 70-80 Estate planning today means giving born in wedlock. = Male natural-born children. attention to three or more generations of

The evil stepmother myth 50-60

The evil stepmother immortalized by the Grimm brothers and, later, by Walt Disney infected many generations with unnecessary prejudice. Family psychologists and therapists have begun to recognize the prevalence of 30-40 stepfamily situations. Several excellent books have been written on this topic, including Stepfamilies, by James H. Bray and John Kelly (Random House, 1999) and Becoming a Stepfamily, by Patricia L. Papernow (Jossey-Bass, 1993). Relationships within a stepfamily are very subjective, qualitative, delicate, ambiguous and changing in nature. 10-20 They include forced relationships, as well as relationships filled with genuine love and affection. Age differentials between stepparents and stepchildren

= Deceased the family on a simultaneous basis. Todays family is more like a group than a unit.

cally disenfranchise stepchildren, regardless of the nature and quality of the relationship. This is often undesirable and its often unintentional. In any event, it is worthy of discussion.

The trust trap

Trusts are frequently used to preserve and protect financial resources for the surviving spouse before substantial distributions are made among the children. Increased longevity, however, suggests that this typical pattern may be inappropriate. Rich widows tend to live to a ripe old age. This

Typical U.S. family tree, circa 2012

Age 85-100 OW = out of wedlock A = adopted DS = donor sperm IV = in vitro
OW 3 2 1 2 3 1 2 (2005)

= Female = Male = Deceased 1 = First marriage 2 = Second marriage 3 = Third marriage

50-75

30-50

1-25

IV

DS

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can postpone financial benefits for children until they are much too old to appreciate the financial windfall. This is an especially glaring problem when substantial financial resources are available for shared enjoyment among two or more generations of the family simultaneously. Estate planners are often guilty of allowing estate tax considerations to drive the plan. Consider the planning complexities associated with stepparents and stepchildren. In many cases, financial resources are preserved for a surviving spouse, and assets are not distributed to children from a prior marriage until after that spouse has died. This may not make sense, however, if the surviving spouse is not substantially older than such children. In addition, there is an inherent conflict of interest between the surviving spouse as lifetime income beneficiary and the children of a prior marriage as remainder beneficiaries. Estate planners and clients should consider better alternatives. Life insurance policies can provide excess funds that can be distributed to children of a prior marriage so they will not have to wait for a stepparents death. Making children of a prior marriage beneficiaries of a portion of qualified retirement plans might be an attractive alternative. Go ahead and face the tough decision of dividing financial assets between and among the surviving spouse and the children from a prior marriage or relationship. Do not

focus on mechanical and technical aspects of wills, trusts and document drafting. This often leads to the subliminal avoidance of the real issues, hidden agendas and future disasters. Teamwork with qualified sociologists, behavioral scientists and psychologists is recommended in many cases. The existence of important soft-side issues cannot be denied in cases of multiple marriages, multiple sets of children and other special family dynamics. Dealing with these issues will bring the estate planner into the den, kitchen, bedroom and closet. But that is where important decision-making is done.

Points to consider

There are many species of family trees. The definition of a nurturing and healthy family has been broadly expanded. Estate planning must have broader parameters to include a wide variety of circumstances and possibilities. Standard document provisions do not fit dynamic family circumstances. This is now the norm rather than the exception. In the most cases, family relationships are more important than estate tax considerations. Inherent and natural conflicts of interest associated with multiple marriage situations must be identified and discussed. The all to spouse in trust or outright will form is often a poor choice. Extra life insurance can be a relaRich widows tend to live to a ripe old age. tively inexpensive planning option that can have remarkable benefits for This can postpone financial benefits for the family. children until they are much too old to Unique and complex planning tools, such as charitable trusts and appreciate the financial windfall. asset protection trusts, can provide differing financial benefits for various be tempted to allow estate tax issues to derail an otherwise members of a family. perfectly logical plan of action. Dont be so sensitive about Equal money does not define equal love. equal sharing with children of the current marriageit Stepchildren are people, too. cant be done. No, the surviving spouse is not automatically entitled The timing and value of different assets will thwart plans to receive everything. of this nature. Control over asset distributions will change Special planning is required in the case of gay families over time. Priorities will also change. Relationships be- (or gay family members). tween a surviving stepparent and stepchildren will likely Longevity is an important factor in the estate planning change after death of the common denominator spouse- process. parent. Mental incompetence and undue influence are significant dangers to consider.

advisers changing roles

Increasingly, estate planners are called upon to exercise multidisciplinary skill sets associated with sociology, behavioral science and psychology. Trusted advisers must be sensitive to family relationships and have an appreciation for family system dynamics. Estate planning should be holistic and should encompass a process of communication within the family group. Assessment, evaluation and interviews with appropriate family members must be a part of the overall planning process. There is no excuse for the intentional, or unintentional,
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Family Business March/April 2012

Estate planning for the dynamic family is a craft, an art, an expertise and a necessity. Sharing family wealth cannot be addressed with canned documents. Issues associated with death and relationships require a focus that goes beFB yond tax planning. n Joe M. Goodman is an attorney, a CPA with Personal Financial Specialist designation and a family business consultant with the Nashville office of law firm Adams and Reese LLP (joe.goodman@arlaw.com).

From left: Stanley, Scott, Adeline and Steven Livingston. Scott says his father and uncle put me through some tests.

Horst Engineering of Connecticut successfully passed to the third generation, but not without some deep soul-searching.

A drAmAtic trAnsition
By Dave DOnelsOn
wnership transitions

send many family businesses sailing into rough waters, but Horst Engineering of East Hartford, Conn., has successfully navigated two such events in its 65-year history. The first was simple, the second more complex. Horst Engineering, a maker of precision-machined components for aerospace, medical and other high-tech industries, is now headed by third-generation member Scott Livingston, who holds the titles of president and CEO. Scotts father, Stanley, and Stanleys brother Steve bought the company from their father in 1979, then sold it to Scott in 2001. The first transition wasnt flawless, but it wasnt accompanied by the soul-searching drama that came along with Scotts purchase of the company at age 29.

I was the change agent that initiated the transition to the third generation, says Scott, now 39. I had great energy and was an idealist. Nothing was impossible. There was a little bit of tension and stress over the changes, but my father and uncle recognized that I had management skills. Those skills, plus the companys strong reputation in the markets it serves, have helped Horst grow. Today, it is a 120-employee operation with plants in the U.S. and Mexico and annual sales of $12 million. The company was founded in 1946 by Horst Rolf Liebenstein, who changed his name to Harry Livingston when he emigrated from Germany in 1938. Harry Livingstons parents died in the Holocaust; his two brothers fled to Africa. Harry, who held a masters degree in mechanical engineering from Germanys Technische Universitt Ilmenau, found
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When the familys consultants presented a transition plan, the secondgeneration business leaders attitude was, no, thats not what our company does and we dont need all that high-falutin stuff, their brother recalls.
work in New Englands tool and die shops, which benefited from wartime demand. When he had saved enough money, he started his own shop in the second story of a barn in Hartford, serving customers in the typewriter, firearms, hardware and aircraft industries. Harry and his wife, Sylvia, had three sons, Stanley, Steve and Bert, who all worked in the shop growing up. When I came out of the service in 1964, says Stanley, now 68, my mother said to me that Dad was going to lose the business unless I came to work for him. Steve, two years younger, joined the company in 1971. Steve was the engineer, and Stanley was the businessman. We worked together very well as a team, Stanley reflects. Youngest brother Bert, now 58, didnt fit in quite as seamlessly. When I came back home from the university with a degree in marketing, he says, they put me back in the shop on a machine. After a year, Bert returned to Jacksonville, Fla., where he had gone to school, and entered the insurance and financial planning business. He stayed close to his family, however, and would play a key role in the transition to the third generation.

Harry Livingstonborn Horst Rolf Liebenstein in Germany started the business in this Hartford, Conn., barn.

Market shifts challenge company

When Harry was ready to sell the company to his sons in 1979, his original plan was for each of the three second-generation members to have a one-third share. But Stanley and Steve, who were both working in the business, wouldnt go for it, Scott says. Bert would eventually acquire a 9% stake; his brothers split the rest equally. The transaction was fairly simple and straightforward, accomplished with the assistance of a single attorney. Stanley assumed the role of president and concentrated on sales and supply chain management, while Steve was VP of engineering. Their father, Harry, continued to come to work until his death in 1998. Stanley and Steve made a series of small acquisitions and

The company has been in its current location since 1950. It launched a Mexico manufacturing operation in 2006. 60
Family Business March/April 2012

focused on contract manufacturing for the commercial and military aerospace industries. They invested in state-ofthe-art machining technologies and cautiously expanded the plant. Stanleys wife, Adeline, served as office and HR manager. Scott joined the company in 1992 after deciding to take a hiatus from college. When I told my parents I was quitting school, they told me I had to get a job, he says. He worked in various positions at Horst for a year. Up until that point, I had had no interest in working at the company, Scott recalls, but once I was exposed to it, I changed my mind. He finished his degree in 1995 at Boston College and came back to Horst the Monday after graduation. Scott says his father and uncle put me through some tests. He was put in charge of a new Horst subsidiary, Thread Rolling Inc., which at the time was a five-person operation. I did all the functions from estimating to sales to purchasing, HR and operations management, Scott says. It was a great learning experience. He went on to handle other projects for the main company after that and ultimately became Horsts general manager. Meanwhile, the company was facing challenges. After the Cold War ended, defense budgets were slashed and the aerospace industry underwent a sea change, putting the familys business under pressure. Change needed to take place operationally, and strategy needed to be looked at, Scott explains. It was time for more systems to be introduced and outside management to be developed. I wanted to do all this. But his father and uncle resisted his suggestions, Scott

at one point, scott became so frustrated he simply walked away, leaving town one day without a word to anyone. He ended up on his uncle Berts doorstep in Florida.
recalls. These guys had been doing it a certain way, and they had been successful, he says. But they knew the handwriting was on the wall. The world was changing and customers were becoming more demanding. Scott persuaded Stanley and Steve to look at hiring the consultants the same way they would buy a production machine, as an investment in the companys future. The consultants presented a transition plan after working with the Livingstons for a year. Getting the plan implemented was no easy feat, family members recall. Stanley and Steve were all going, No, thats not what our company does Founder Harry Livingston lost and we dont need all his parents in the Holocaust. that high-falutin stuff, Bert says. My brother Steve didnt see the need for it. I may not have got where it was going at the beginning, but I didnt buck it, Steve replies. Stanley had a harder time than me giving up control. He sort of banged heads with the consultants a little bit. Stanley doesnt deny either account, but says, As a family, we did it right. My brothers and I understood that we were not the people to take the business any furtherScott was. That realization didnt come easily, although several factors pushed them toward it. Scott was the logical heir if they wanted to keep the company in the family. Steve had no children; Berts daughter was an infant at the time; and Scotts sister, Stacie, had never gravitated toward the business. The decision was also fueled by the health problems the second-generation brothers were dealing with. Even though they were relatively young men, they didnt want to be forced to concoct an ownership transition in a time of stress. Still, implementation of the plan didnt go forward smoothly. The process was intense, Scott says. There were a lot of informal conversations among key employees outside the family, too. There were a lot of folks pushing for changes.

succession catalysts
In 1999, the University of Connecticut Family Business Program gave Horst its Nozko Award for medium-sized businesses, one of its Connecticut Family Business of the Year honors. According to Bert, that drew the attention of numerous family business consultants who began talking to the company about transition planning. He and Scott talked to several firms and eventually engaged one to help them. Why was the succession process initiated by a next-generation member and a minority owner who did not work in the business? I was hungry for greater responsibility, and Bert was interested in monetizing his interest in the company, Scott explains. Steve and Stanley were noseto-the-grindstone and not interested in that kind of stuff. I was the instigator, and Bert and I kind of partnered. My mother was an ally for me as well. Adeline, Scotts mother, says there were two reasons she backed the idea: In addition to needing help in managing a larger and more complex company, Steven and Stanley had some personal health [issues] that needed to be dealt with. We had to plan.

a spontaneous trip to Florida

At one point, Scott became so frustrated he simply walked away, leaving town one day without a word to anyone. That demonstrated that if I couldnt get their commitment, I wasnt going to put my energy into it, he explains. I literally didnt tell them where I was going, but I ended up on Berts doorstep in Florida.
www.familybusinessmagazine.com

From left: Steve, Bert, Harry and Stanley Livingston in a May 1977 photo. Harry sold the business to his sons in 1979. Bert acquired a small share; his brothers split the rest.

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Bert, who owned only a small portion of the company and didnt work there, played the role of neutral observer.
Bert had no advance warning. He recalls, When I got Stanley, who knows every part number at Boeing, out of home, there was his pickup truck in my driveway. That the picture. You cant get 35 years worth of knowledge was the start of it. The first thing he told Scott to do was from new people. call home and let his parents know where he was. That Steve adds, We had confidence that, if Scott failed, we week, he got a lot of exercise, Bert says. He bonded with were both there to bail him out. my daughter and wife. We hung around and talked about That has not been necessary. When Scott took over on things. It was more of a decompression period. While Scott June 1, 2001, of course, no one anticipated the tragedy of was there, Bert talked to his brothers about the significance 9/11 and how it would affect the aerospace industry. The of Scotts move. I asked them if they wanted to sell the com- company weathered the resultant recession, however, and pany to somebody else, or did they want Scott to have it? Scott says, by 2003 through 2009, things were fantastic. Scott says, It was an important step in the process. When The company has suffered a bit during the recent downI came back, we had a better turn but is still on track, conversation. Scott says. The tipping point finally As soon as he assumed came at a meeting with the control, Scott created a consultants where everymanagement team, gave ones true feelings came them authority to make deout, according to Bert. It cisions, and put in systems was all just the family dyhe felt necessary to comnamic that they couldnt pete. In 2006, the company talk about and didnt underlaunched a manufacturing stand, he says. I brokered operation in Mexico to take it. Bert says he could play advantage of substantially the role of neutral observer lower labor costs. A longsince his share of the comterm strategic plan and pany was fairly small and capacity expansion for the he could be straight with Scott in a cycling race. The company sponsors a cycling team. East Hartford operation was everyone involved because initiated that year as well. they were family. They were my brothers and I could say In 2009, Horst Medical was formed to produce components whatever I want, he says. I wasnt a consultant, but I was for multiple medical needs, including orthopedics, endosnever afraid to express my opinion. After an emotional copy, laparoscopy and spinal and trauma treatments. discussion, they accepted the plan and agreed to hire the Scott is an avid athlete and high-level competitor in enconsultants to help move the company forward. durance-based team sports, especially cycling, a pursuit The result was a 15-year buyout agreementfunded by that he says adds to his energy and endurance as a manthe companys growththat put the firm completely in ager. Hes also a runner, as is his wife, Deb, and the two ofScotts hands. The idea was to grow the business to fund ten run races with their five-year-old-son and two-year-old the transition, Scott says. It satisfied [the elders] estate daughter in tow. The company sponsors Team Horst Sports, planning needs and provided me with operating control so a road cycling team that competes around the world. In adI could put it on a growth track. dition, Horst Engineering is the title sponsor of the HorstOne key point Scott makes when talking about the transi- Benidorm-PRC Masters Cycling Team. tion process: It was a happy family at the beginning, and The company had a board of advisers at one time, but it still is. currently operates without one, according to Scott. He is Significantly, Stanley and Steve didnt retire. They are very active in the Young Presidents Organization and conofficially VPs, but titles dont mean anything to them, siders many of his fellow members as advisers. His father Scott says. Stanley works in sales and customer service, and uncles are available to offer suggestions, too. and Steve does engineering projects. Scotts mother still My father was my mentor, Scott says. From him and works part-time in accounting. Their compensation was my uncle, I learned the cultural values necessary to be an FB adjusted to reflect different responsibilities but to maintain upstanding businessman. n their connection to the business, Scott points out. They benefited from the sale of the business, too. Dave Donelson is a business journalist in West Harrison, Having both men on staff full time is a big plus, accord- N.Y., and the author of the Dynamic Manager guides and ing to Bert: You need them. You cant take my brother handbooks.
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Family Business March/April 2012

to o l b o x
By BArBArA Spector

Family business apps for iPad, iPhone

engrossed in Angry Birds, Words with Friends and other popular time-wasting iPad and iPhone apps? Two new family business-oriented apps, available free of charge, offer an educational alternative. The Business Families Foundationa Montreal-based non-profit organization that develops and produces educational programs for family business stakeholders worldwidehas made its collection of video and audio clips available on mobile devices via its free BFF Videos for iPad and BFF Videos for iPhone apps. The videos are also available on the foundations website, www.businessfamilies.org. Among the BFF videos are conversations, most between three and six minutes long, with members of business families. In the professionally produced segments, the family members discuss topics such as succession, community service and the role of the next generation. In a series of short films, for example, members of the Woodman familyowners of seafood restaurants in Essex, Mass., and Litchfield, N.H., under the third generation of family leadershipdescribe the challenges they faced upon the death of the second-generation leader, who did not have an adequate succession plan, and how the fourth generation has been brought into the business. Another video stars the Basile family, owners of CataniaSpagna Corp. in Ayer, Mass., producers of olive and vegetable oils. Members of the familys third and fourth generations discuss how each generation has leveraged what their predecessors have created. And in one of a series of clips featuring the Kotelko family owners of Highland Feeders, cattlefeed lots in Alberta, CanadaDonna Kotelko, wife of co-owner Bern Kotelko, discusses her role as the family leader. Other BFF videos available via the app feature interviews with Harvard MBA students from family businesses, insights from family business advisers, and information from the foundations affiliate centers at higher education institutions. The foundation plans to add new videos on a regular basis.
o you spend too much time

A family business game Another free BFF appavailable for the iPad onlyis a game designed for teenagers. Called Journey, the Family Business Game, the app uses photos from the National Geographic collection to get young people thinking about family business issues. The initial version of the gamefeaturing multiplechoice questions and a segment in which players rearrange photos by dragging them across a screenhas some flaws. Some questions are too easy, and others focus on what the photos depict rather than on what a family stakeholder needs to know. A series of multiple-choice questions requires players to interpret the activities of family members shown in photos that could be considered ambiguous. (For example, is an Icelandic family seated around a dining table trying food samples from their farm or spending time together at a family lunch reunion?) BFF promises that a future version of the game will include more questions and enable teams and schools to compete against each other. Multimedia ventures B F F wa s fo u n d e d i n 1 9 9 0 b y Philippe and Nan-b de Gasp Beaubien, who perceived a need for more family business resources and more venues for family business owners to discuss their concerns. Philippe de Gasp Beaubien founded Telemedia, a Canadian company with holdings in radio, television and magazine publishing. The foundation also offers online courses and other educational programs. At least at this stage of development, the videos are more effective than the game in achieving BFFs objective of sparking conversations among family members or between family business stakeholders and their peers in other companies. It will be interesting to see how the game evolves. To find the apps, search for Business Families FB Foundation in the App Store or on iTunes. n
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D i r e c tory o F ADvisers

Advisers for Family Companies

Family business centers, professional firms and financial institutions serving family-owned businesses around the world.
visit the Directory of Advisers page at www.familybusinessmagazine.com for these listings and website links.
ACADEMIC PROGRAMS/ FAMIly BuSInESS CEntERS

Austin Family Business Program at Oregon State University College of Business 201 Bexell Hall Corvallis, OR 97331-2603 p: 800-859-7609 f: 541-737-5388 Dr. Sherri Noxel, Director sherri.noxel@bus.oregonstate.edu www.familybusinessonline.org

Cox Family Enterprise Center Coles College of Business Kennesaw State University 1000 Chastain Road, MD4900 Kennesaw, GA 30144 p: 770-423-6045 f: 770-423-6721 Dr. Joseph H. Astrachan, Exec. Director cfec@kennesaw.edu familybusiness.kennesaw.edu familybusinessmba.com Delaware Valley Family Business Center, Telford, PA See listing under Family Business Consultants.

Family Business Center of Loyola University Chicago 820 North Michigan Avenue Chicago, IL 60611 p: 312-915-6490 f: 312-915-6495 Andrew D. Keyt, Executive Director Anne Smart, Membership Director Erin Kuhn-Krueger Marketing & Programs Director www.luc.edu/fbc Family Business Center University of St. Thomas See listing under Family Business Centers. Family Business Forum at King's College The William G. McGowan School of Business 133 North River Street Wilkes-Barre, PA 18711 p: 570-208-5972 f: 570-208-5989 Patrice R. Persico, Director fbf@kings.edu www.kings.edu/fbf

The Capital Region Family Business Center A non-profit organization devoted to helping family businesses meet their unique needs through special educational workshops, round-table discussion groups and relationship building social events. 2443 Fair Oaks Boulevard #509 Sacramento, CA 95825 p: 916-481-0886 Jim Sabraw, Executive Director jsabraw@tcrfbc.org www.tcrfbc.org

EMC Business Forum at San Diego State University Driving the growth and development of closely-held and family businesses by offering one-on-one advising services, entrepreneurial coaching, workshops, retreats, resources and peer support. 5250 Campanile Drive San Diego, CA 92182 p: 619-594-4949 f: 619-594-8879 Carmen Bianchi, Director cbianchi@emc.sdsu.edu www.sdsu.edu/emc

Centenary College of Louisiana Frost School of Business 2911 Centenary Boulevard Shreveport, LA 71104
p:

Family Business Network USA (FBN-USA) 820 North Michigan Avenue Chicago, IL 60611
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Dr. Chris Martin, Founder, Dean cmartin@centenary.edu www.centenary.edu/family

318-869-5149 f: 318-869-5139

Family Business Alliance 401 West Fulton Street 274C DeVos Grand Rapids, MI 49504
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Andrew D. Keyt, Executive Director Anne Smart, Membership Director Erin Kuhn-Krueger Marketing & Programs Director www.luc.edu/fbc Family Solutions Group See listing under Family Business Consultants.

312-915-6490 f: 312-915-6495

Ellie Frey, Director freyel@gvsu.edu www.FBAgr.org

616-331-6827

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Family Business March/April 2012

D i r e c tory o F ADvisers
The Institute for Entrepreneurial Excellence University of Pittsburgh 1800 Wesley Posvar Hall Pittsburgh, PA 15260 p: 412-648-1544 f: 412-648-1636 Ann Dugan, Founder/Assistant Dean adugan@katz.pitt.edu www.entrepreneur.pitt.edu

Families in Business: From Generation to Generation Teaching best practices and principles of successful family companies Harvard Business School Executive Education Soldiers Field Boston, MA 02163-9986 p: 1-800-427-5577 or + 1-617-495-6555 f: +1-617-495-6999 Jacqueline Baugher, Director executive_education@hbs.edu www.exed.hbs.edu

Stetson University Family Enterprise Center 421 N. Woodland Blvd., Unit 8398 Deland, FL 32723 p: 386-822-7565 f: 386-822-7426 Dr. Greg McCann, Program Coordinator gmccann@stetson.edu www.stetson.edu/family Tulane University Family Business Center A.B. Freeman School of Business New Orleans, LA 70118-5669 p: 504-862-8482 f: 504-862-8902 Rosalind G. Butler, Assistant Director Rosalind.Butler@Tulane.edu www.freeman.tulane.edu/fbc UMass Family Business Center Continuing & Professional Education 100 Venture Way, Suite 201 Hadley, MA 01035 p: 413-545-4545 f: 413-545-3351 Ira Bryck, Director ira@umassfbc.com www.umassfbc.com

Kellogg School of Management Center for Family Enterprises Executive Programs: Governing Family Enterprises March 4-8, 2012 October 7-11, 2012 Leading Family Enterprises May 6-10, 2012 2001 Sheridan Road, Room 5228 Evanston, IL 60208 p: 847-467-7855 f: 847-491-5747 Professors John L. Ward, Lloyd E. Shefsky and Ivan Lansberg www.familybusiness.kellogg.northwestern.edu Northeastern University Center for Family Business 101 Hayden Hall Boston, MA 02115-5000 p: 617-373-7031 f: 617-373-2056 Ted Clark, Executive Director ted.clark@neu.edu www.fambiz.neu.edu

IEFB - Instituto de Empresas Familiares do Brasil & Family Business School Sao Paulo, Brasil
p:

Hernan Fuentes info@iefb.com.br www.iefb.com.br www.familybusinessschool.com.br www.familybusinessmagazine.com.br

0800 707 5887

The University of Chicago Booth School of Business 450 N. Cityfront Plaza Drive, Suite 514 Chicago, IL 60611
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Mark Lewis, Associate Director exec.ed@ChicagoBooth.edu www.chicagoexec.net IMD Family Business Center, est. 1988 Family businesses from around the world come to IMDs Global Family Business Center for the most relevant and up-todate knowledge on how to deal with the highly specific and unique challenges they are facing. Leading the Family Business, the cornerstone of IMDs family business programs, was launched in 1988, and it has since become world-renowned for providing advanced fundamentals and practice driven solutions for family businesses. It is a must for all members of business-owning families. Ch. de Bellerive 23 P.O. Box 915 CH-1001 Lausanne, Switzerland p: +41 21 6180329 f: +41 21 6180707 Lise Moeller, Family Business Relations lise.moeller@imd.org www.imd.org/gfbc The S. Dale High Center for Family Business at Elizabethtown College One Alpha Drive Elizabethtown, PA 17022-2298 p: 717-361-1275 Mike McGrann, Executive Director fbc@etown.edu www.centerforfamilybusiness.org http://sdalehighcenter.blogspot.com Sauder School of Business Business Families Centre University of British Columbia
p:

312-464-8732 f: 312-464-8731

The University of Illinois at Chicago Family Business Council 815 West Van Buren Street, Suite 400 Chicago, IL 60607 p: 312-413-5433 f: 312-996-9988 Judy Hogel, Director hogel1@uic.edu www.uicfbc.com

Angela Nielsen Marketing Manager angela.nielsen@sauder.ubc.ca www.sauder.ubc.ca/bfc

604-822-8611

www.familybusinessmagazine.com

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D i r e c tory o F ADvisers
ACADEMIC PROGRAMS/ FAMILy BUSINESS CENTERS
CONTINuED FROM PREVIOuS PAGE

APPRAISAl & VAluAtIOn FIRMS

Private Wealth Management Wharton Executive Education The Wharton School August 15-20, 2010 Steinberg Conference Center 255 South 38th Street Philadelphia, PA 19104 University of San Diego Family Business Forum 5998 Alcala Park San Diego, CA 92110-2492 p: 619-260-4231 f: 619-260-5988 Jodi Waterhouse, Director jodiw@sandiego.edu www.sandiego.edu/fbf The University of Toledo Center for Family Business MS 103 ST-N 2200B 2801 West Bancroft Street Toledo, OH 43606-3390
p: p:

American Fortune Mergers & Acquisitions See listing under Mergers & Acquisitions. The Baker-Meekins Company, Inc. 1404 Front Avenue Lutherville, MD 21093 p: 410-823-2600 f: 410-823-8455 Ross Adams, CFA - President radams@bakermeekins.com www.bakermeekins.com

Jen Gers, Director, Financial Services jgers@wharton.upenn.edu http://executiveeducation.wharton.upenn .edu/open-enrollment/finance-programs/ private-wealth-managementprogram.cfm Wisconsin Family Business Forum University of Wisconsin - Oshkosh 800 Algoma Boulevard Oshkosh, WI 54901
p:

215-573-0864 f: 215-386-4304

Debbe Skutch, Director debbe.skutch@utoledo.edu www.utfamilybusiness.org

419-530-4058 f: 419-530-8497

Donna Nelson, Assistant Director nelsond@uwosh.edu www.wfbf.uwosh.edu

ACCOuntAntS

920-424-1541 f: 920-424-7413

University of Wisconsin-Madison Family Business Center 601 University Avenue Fluno Center Madison, WI 53715-1035 p: 608-441-7338 f: 608-441-7337 Deb Houden, Ph.D., Director dhouden@bus.wisc.edu http://fbc.wisc.edu

BBD, LLP 1835 Market Street, 26th Floor Philadelphia, PA 19103 p: 215-567-7770 f: 215-567-6081 Charles J. Bramley, CPA, Partner cbramley@bbdcpa.com www.bbdcpa.com

Higgins, Marcus & Lovett, Inc. 800 South Figueroa Street, Suite 710 Los Angeles, CA 90017 p: 213-617-7775 f: 213-617-8372 Mark C. Higgins, ASA info@hmlinc.com www.hmlinc.com

Valuation Advisors, LLC 2495 Kensington Avenue Buffalo, NY 14226 p: 716-839-5290 Brian Pearson, CPA/ABV/CFF/PFS, ASA President bp@valuationpros.com
AttORnEyS

Wake Forest University Family Business Center Office of Personal and Career Development 1834 Wake Forest Road Reynold Hall, Room 250C Winston-Salem, NC 27106 p: 336-758-3568 Kathy Baker, Director bakerka@wfu.edu http://familybusiness.opcd.wfu.edu

Kreischer Miller 100 Witmer Road, Suite 350 Horsham, PA 19044 p: 215-441-4600 (ext. 144) f: 215-672-8224 Mario O. Vicari, Jr., CPA, CVA mvicari@kmco.com www.kmco.com Rothstein Kass See listing under Family Business Consultants.

Adams and Reese LLP Family Business Succession Planning 424 Church Street, Suite 2700 Nashville, TN 37219 p: 615-259-1011 f: 615-780-4497 Joe M. Goodman, Principal joe.goodman@arlaw.com www.adamsandreese.com Barnes & Thornburg LLP 600 1st Source Bank Center 100 North Michigan Street South Bend, IN 46601 p: 574-233-1171 f: 574-237-1125 Nelson J. Vogel nelson.vogel@btlaw.com www.btlaw.com

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D i r e c tory o F ADvisers
Emens & Wolper Law Firm, LPA
One Easton Oval, Suite 550 Columbus, OH 43219 p: 614-414-0888 f: 614-414-0898 Bea Wolper bwolper@emenswolperlaw.com Dick Emens demens@emenswolperlaw.com www.emenswolperlaw.com
BIOGRAPhERS & hIStORIAnS

Locke Lord Bissell & Liddell 111 South Wacker Drive Chicago, IL 60606-4410 p: 312-443-0693 f: 312-896-6693 David L. Kendall, Partner dkendall@lockelord.com www.lockelord.com

Heritage Publishers, Inc. 3217 E. Shea Boulevard, Suite 420 Phoenix, AZ 85028 p: 800-972-8507 f: 602-277-1659 Lorrie Myers Maddux, President & Owner John Myers, Founder heritage@fastq.com www.heritagepublishers.com

Gould & Ratner LLP 222 N. LaSalle Street, Suite 800 Chicago, IL 60601 p: 312-236-3003 f: 312-236-3241 Steven Gustafson, Partner sgustafson@gouldratner.com www.gouldratner.com

Memoirs Productions 5553 Queen Mary, #17 Montreal, QC Canada H3X 1W1
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Meltzer, Lippe, Goldstein & Breitstone, LLP 190 Willis Avenue Mineola, NY 11501
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Iris Wagner, Founder & CEO Iris.Wagner@MemoirsProductions.com www.MemoirsProductions.com

866-481-9303 f: Call first

Hemenway & Barnes LLP 60 State Street, 8th Floor Boston, MA 02109
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Jeffrey A. Galant jgalant@meltzerlippe.com www.meltzerlippe.com

516-747-0300 x232 f: 516-747-2956

Susan P. Munafo Business Development Manager smunafo@hembar.com www.hembar.com

617-557-9771

Pierce Atwood LLP One New Hampshire Avenue, Suite 350 Portsmouth, NH 03801 p: 603-433-6300 f: 603-433-6372 Wilfred L. Jack Sanders, Jr., Esquire jsanders@pierceatwood.com www.pierceatwood.com Reed Smith LLP 2500 One Liberty Place 1650 Market Street Philadelphia, PA 19103 p: 215-851-8132 f: 215-851-1420 Joseph M. Sedlack, Partner jsedlack@reedsmith.com www.reedsmith.com

Reel Tributes Philadelphia, PA

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Levin Schreder & Carey Ltd. Practice devoted to tax and charitable planning, trusts and estates, and related dispute resolution. 120 North LaSalle Street, 38th Floor Chicago, IL 60602
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David Adelman, CEO info@reeltributes.com www.reeltributes.com

BuSInESS & EStAtE PlAnnInG COnSultAntS

267-217-3355

www.levinschreder.com Scott Bieber, Partner scott@levinschreder.com James R. Carey, Partner jim@levinschreder.com Robert M. Levin, Partner bob@levinschreder.com David E. Lieberman, Partner david@levinschreder.com Robin Drey Maher robin@levinschreder.com Todd J. Schneider, Partner todd@levinschreder.com Carleen L. Schreder, Partner carleen@levinschreder.com Mary Lee Turk, Partner marylee@levinschreder.com

312-332-6300 f: 312-332-6393

Withers Bergman LLP 430 Park Avenue New York, NY 10022

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Coyote Financial, Inc. 28039 North 95th Street Scottsdale, AZ 85262 p: 480-905-3260 f: 480-998-6925 John A. House, President and Chief Executive Officer john@coyotefinancial.com www.coyotefinancial.com Hemenway & Barnes LLP See listing under Attorneys.

Justin M. Zamparelli, Esq., Partner justin.zamparelli@withers.us.com www.withersworldwide.com

212-848-9800 f: 212-848-9888

Educate your clients and market your services with reprints of Family Business Magazine articles. Contact Barbara Wenger at bwenger@familybusinessmagazine.com or (215) 405-6072.
www.familybusinessmagazine.com

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BUSINESS & ESTATE PLANNING CONSULTANTS
CONTINuED FROM PREVIOuS PAGE

BuSInESS PERFORMAnCE

DVD lEGACIES

Predictable Futures Inc. The Business Family Center See listing under Family Business Consultants. Rothstein Kass See listing under Family Business Consultants.
BuSInESS DEVElOPMEnt ADVISORS

CFAR, Inc. See listing under Family Business Consultants. Continuity Family Business Consulting See listing under Family Business Consultants. ReGENERATION Partners LLC See listing under Family Business Consultants.
CEO PEER GROuPS

Memoirs Productions See listing under Biographers & Historians.

ExECutIVE COAChInG

Executive Advisors See listing under Family Business Consultants.

Industrial Visions Business development advisors to smallto-medium sized, closely-held and familyowned firms. 200 East Big Beaver Road Troy, MI 48083
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Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers. The University of Illinois at Chicago Family Business Council See listing under Academic Programs/ Family Business Centers.
COMMunICAtIOnS AnD PuBlIC RElAtIOnS

FamilyBusinessCoach.TV 4144 N. 44th Street, Suite F Phoenix, AZ 85018

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Pete Walsh, Master Certified Coach pete@peakcoach.com www.peakcoach.com Predictable Futures Inc.The Business Family Center See listing under Family Business Consultants. Unifi Coaching Professional Life and Leadership Coaching for individuals, teams, and businesses. Philadelphia, PA
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602-952-9015 f: 602-955-1989

Gary M. Giallonardo, President garyg@industrialv.com www.industrialv.com

248-457-4505 f: 248-524-4914

BuSInESS ExIt PlAnnInG

American Fortune Mergers & Acquisitions See listing under Mergers & Acquisitions. Brandywine Mergers & Acquisitions, LLC See listing under Mergers & Acquisitions. The DAK Group See listing under Investment Banking Firms. Hemenway & Barnes LLP See listing under Attorneys. Kreischer Miller See listing under Accountants. Predictable Futures Inc. The Business Family Center See listing under Family Business Consultants. Rothstein Kass See listing under Family Business Consultants.

The Dilenschneider Group 200 Park Avenue 26th Floor New York, NY 10166
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Robert L. Dilenschneider www.dilenschneider.com

212-922-0900 f: 212-922-0971

Christin Cardone McClave christin@unifi-coaching.com www.unifi-coaching.com

ExECutIVE REtAInED SEARCh

610-324-0985

COnFlICt MAnAGEMEnt

Continuity Family Business Consulting See listing under Family Business Consultants. The Family Business Consulting Group, Inc. See listing under Family Business Consultants. John G. Wofford, Esq. See listing under Mediation.
CROSS-GEnERAtIOnAl lEGACy PlAnnInG

The Rankin Group Ltd. See listing under Family Office Management & Search Consultants.

Hemenway & Barnes LLP See listing under Attorneys.

S.E. Weinstein Company 1830 Second Avenue, Suite 240 Rock Island, IL 61201 p: 800-258-1701/309-794-1992 f: 309-794-1993 Denise Winston Director Corporate Recruiting hunter1830@sbcglobal.net www.seweinstein.com

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FAMIly & BuSInESS PhIlAnthROPy

Family Solutions Group See listing under Family Business Consultants.

Conway Center for Family Business Ohio Dominican University

1216 Sunbury Road Columbus, OH 43219 p: 614-253-4820 Deana Gordon, Associate Director gordon@familybusinesscenter.com Dick Emens, Executive Director demens@emenswolperlaw.com www.familybusinesscenter.com EMC Business Forum at San Diego State University See listing under Academic Programs/ Family Business Centers. Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. Family Business Center University of St. Thomas 1000 LaSalle Ave SCH435 Minneapolis, MN 55403-2005 p: 651-962-4252 f: 651-962-4180 Dr. Ritch Sorenson, Opus Endowed Chair in Family Business rlsorenson@stthomas.edu www.familybusiness.stthomas.edu Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers. Predictable Futures Inc.The Business Family Center See listing under Family Business Consultants.
FAMIly BuSInESS COnSultAntS

Fitzpatrick & Francis Family Business Continuity Foundation P.O. Box 4815 Topeka, KS 66604-0815
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Allomet Partners, LLC Better decisions create opportunity. Assisting families, management and directors to raise capital, develop strategy, plan for growth, facilitate transitions. 330 Madison Avenue, 6th Floor New York, NY 10017 p: 212-580-2489 f: 212-505-6339 Gary Brooks, Principal Gary@allometLLC.com Leslie Solomon, Principal Leslie@allometllc.com www.AllometLLc.com Aspen Family Business Group, LLC Leslie Dashew, M.S.W. Joe Paul, M.S. Bill Roberts, CLu, ChFC Terri L. Bennink, Psy.D. David Bork, Founder Emeritus Fort Worth, TX 76107 p: 866-442-7736 f: 817-735-4142 info@aspenfamilybusiness.com www.aspenfamilybusiness.com William E. Roberts, Jr. Auctoris 5350 S. Roslyn Street, Suite 310 Greenwood Village, CO 80111
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Jack Fitzpatrick, President JackFitz@FamilyBizFoundation.org www.familybizfoundation.org Hemenway & Barnes LLP See listing under Attorneys.

785-273-8500 f: 785-273-8768

Predictable Futures Inc. The Business Family Center See listing under Family Business Consultants.
FAMIly BuSInESS & WEAlth MEDIAtIOn

Continuity Family Business Consulting See listing under Family Business Consultants. Relative Solutions, LLC See listing under Family Business Consultants.

williamroberts@auctoris.com www.auctoris.com James E. Barrett Managing Director, Cresheim, Inc. Business planning, management development, organization and selection, and people problems. 8315 Flourtown Avenue Wyndmoor, PA 19038 p: 215-836-1405 jebcmc99@comcast.net Terri L. Bennink, Psy.D. Bennink Consulting 7410 SW Oleson Road Portland, OR 97223
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303-740-8001

Upchurch Watson White & Max Family Business & Wealth Mediation Group Offices in Daytona Beach, Orlando, Miami and Birmingham p: 800-863-1462 Gerald Le Van, Chair Michelle Jernigan, Richard Lord, Co-Chairs www.uww-adr.com
FAMIly BuSInESS CEntERS

Adams and Reese LLP See listing under Attorneys.

terri@benninkconsulting.com www.benninkconsulting.com

503-246-4321

The Capital Region Family Business Center See listing under Academic Programs/ Family Business Centers.

www.familybusinessmagazine.com

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FAMILy BUSINESS CONSULTANTS
CONTINuED FROM PREVIOuS PAGE

CFAR, Inc. CFAR knows family businesses. For 25 years, weve helped clients meet their future with innovative plans for strategy, succession, governance and organizational development, keeping the best of their culture intact. Carmen Bianchi Family Business Associates 14758 Caminito Punta Arenas Del Mar, CA 92014 p: 858-793-2445 or 858-922-3155 Carmen Bianchi, Principal cbianchi@familybizconsulting.com www.familybizconsulting.com David Bork P.O. Box 4300 Basalt, CO 81621
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Four Penn Center 1600 John F. Kennedy Boulevard, Suite 600 Philadelphia, PA 19103 p: 215-320-3200 f: 215-320-3204 Ms. Nancy Drozdow, Principal ndrozdow@cfar.com www.cfar.com 1030 Massachusetts Avenue, Suite 330 Cambridge, MA 02138
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Ms. Debbie Bing, Principal dbing@cfar.com www.cfar.com

617-576-1166 f: 617-576-3015

de Visscher & Co. de Visscher & Co. is a fully integrated financial consulting, investment banking and private equity firm serving the capital and liquidity needs of closelyheld and family owned companies. The company identifies, analyzes and implements financial solutions and shareholder value creation strategies for business owning families and family offices. Family Capital Partners was established by de Visscher & Co. as a conduit for long-term equity capital from Family Offices and patient capital investors, and growing Family Owned Companies looking for trustworthy, value-added and like-minded capital partners. Families Investing in Families. Two Greenwich Office Park Greenwich, CT 06831 p: 203-629-6500 f: 203-629-6547 Francois de Visscher; James A. Murphey francois@devisscher.com jmurphy@devisscher.com www.devisscher.com Delaware Valley Family Business Center Our unique approach, The Lasting Legacy Process, provides the direction, confidence, and tools to business families as they prepare for generations of success. We nurture competent, committed next generation leaders, build robust companies, grow healthy adult family relationships, and develop appropriate governance structures. Ask about our Leadership Labs, peer groups which provide guidance, accountability, and outside perspectives to presidents and next generation family leaders. 340 N. Main Street Telford, PA 18969 p: 215-723-8413 f: 215-723-8351 Sally Derstine, Managing Director sally@dvfbc.com www.dvfbc.com Dohr Family Business Consulting Building Value and Harmony to Family Businesses in Transition. 11324 47th Street Court East Edgewood, WA 98372 p: 253-863-9147 f: 253-987-7098 Dr. Ronald M. Dohr ron@rondohr.com www.rondohr.com

bork@davidbork.com www.davidbork.com Continuity Family Business Consulting Helping business and family benefit through wealth creation, personal and professional growth, and family harmony. Specialists in managing conflict when continuing relationships matter. 900 Cummings Center, Suite 413T Beverly, MA 01915
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970-927-8555

Business Consulting Resources, Inc. Working with Hawaii Family Businesses since 1981 116 South Hotel Street, Suite 204 Honolulu, HI 96813
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Ken Gilbert, Senior Consultant/Partner ken@bcrhawaii.com www.bcrhawaii.com

808-545-4111 f: 808-522-8935

Doug Baumoel, Founder DBaumoel@ContinuityFBC.com www.continuityFBc.com

1-978-925-5149 f: 978-964-0541

Center for Family Business Dynamics Family businesses in transition, succession-conflict solutions. 105 E. De La Guerra Street, #2 Santa Barbara, CA 93101 p: 805-892-2357 Ralph M. Daniel, Ph.D., Family Business Advisor rdaniel@fambus.com www.fambus.com

Leslie Dashew Human side of enterprise 21839 North 98th Street Scottsdale, AZ 85255 p: 480-419-4243 ldashew@gmail.com www.aspenfamilybusiness.com www.lesliedashew.com

Thomas D. Davidow & Associates 183 Gardner Road Brookline, MA 02445 p: 617-739-2868 f: 617-739-7221 Thomas Davidow, Ed.D., Principal Cynthia Adams, Ed.D., LICSW, Partner tom@tdavidow.com www.tdavidow.com

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EisnerAmper LLP 750 Third Avenue New York, NY 10017

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Family Solutions Group A unique firm focusing on the emotional complexities of family businesses and significant wealth. 255 South 17th Street, Suite 2710 Philadelphia, PA 19103 p: 215-985-9881 f: 215-985-9805 Edward P. Monte, Ph.D., Principal emonte@familysolutionsgroup.net www.familysolutionsgroup.net Fitzpatrick & Francis Family Business Continuity Foundation See listing under Family & Business Philanthropy. Dean Fowler Associates, Inc. 200 S. Executive Drive, Suite 101 Brookfield, WI 53005 p: 262-271-5979 Dean R. Fowler, Ph.D., President dean@deanfowler.com www.deanfowler.com The Frankenberg Group 800 Compton Road, Suite 27 Cincinnati, OH 45231 p: 513-729-1511 Ellen Frankenberg, Ph.D., Managing Director ellen@frankenberggroup.com www.frankenberggroup.com Henning Family Business Center 1006 North Pembroke Court Effingham, IL 62401 p: 217-342-3728 Mike Henning, President hfbc@mikehenning.com www.mikehenning.com Jane Hilburt-Davis, President Key Resources, LLC 75 Cambridge Parkway #E808 Cambridge, MA 02142 p: 617-577-0044 j.hilburtdavis@comcast.net www.familybusinessconsulting.com Dennis T. Jaffe, Ph.D. 764 Ashbury Street San Francisco, CA 94117
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Timothy Speiss, Partner timothy.speiss@eisneramper.com www.eisneramper.com Executive Advisors 301 North Canon Drive, Suite 313 Beverly Hills, CA 90210 p: 310-553-0442 f: 310-553-3009 executive Lilli Friedland, Ph.D. advisors President Beth, Executive Assistant mail@executiveadvisors.org www.executiveadvisors.org

212-891-4087

The Legacy Associates, LLC 700 Twelve Oaks Center Drive, Suite 262 Wayzata, MN 55391 p: 763-475-9353 Allen Bettis, Principal allen.bettis@legacyassociates.com www.legacyassociates.com Legasus Group, LC 121 N. Mead, Suite 109 Wichita, KS 67202 p: 316-681-0444 f: 316681-0589 Clemens H. Ast cast@LegasusGroup.com John Simmering jsimmering@legasusgroup.com www.LegasusGroup.com McNabb Advisors Innovative approach advising Affluent Families and their Businesses. Enhancing communication and decision-making (governance); designing architecture for future generations (succession and leadership); continuing family legacy; resolving family relationship issues; Mentor in preparation of next generation and advisor to family offices. 3333 Lee Parkway, Suite 600 Dallas, TX 75219
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The Family Business Consulting Group, Inc. We help family businesses explore solutions to family business issues, decide on the best course of action, and implement plans that will help the family business succeed for generations. Our team of more than twenty consultants includes specialists in all areas of family business, including succession planning, family meetings, governance issues, psychology, team building, communications, finance, conflict resolution, strategic planning and family business education. 2835 N. Sheffield Avenue, Suite 237 Chicago, IL 60657 p: 888-421-0110 Drew Mendoza, Managing Principal mendoza@efamilybusiness.com www.efamilybusiness.com

Jerry McNabb, Principal mcnabbadvise@msn.com www.jerrymcnabb.com

214-665-9494 f: 214-665-9493

Joe Paul, MS J. Paul Consulting 4025 SW 6th Avenue Drive Portland, OR 97239
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familyfirm@aol.com

971-544-0948

The Family Business Institute, Inc. 4700 Homewood Court, Suite 340 Raleigh, NC 27609 p: 877-326-2493 f: 919-783-1892 Wayne Rivers, President info@familybusinessinstitute.com www.familybusinessinstitute.com

Dennis T. Jaffe, Ph.D. djaffe@saybrook.edu www.dennisjafe.com

415-665-8699

Pervin Family Business Advisors Inc. The Canadian leader in the resolution of complex family enterprise and ownership situations and business family relationships for business families and accidental partnerships who demand results, not recommendations. 94 Cumberland Street, Suite 604 Toronto, Ontario M5R 1A3 Canada p: +1-416-360-0177 m: +1-416-801-3200 skype: aron.pervin Aron Pervin, CMC, ICD.D, TEP apervin@pervinfamilybusiness.com www.pervinfamilybusiness.com
www.familybusinessmagazine.com

Lansberg, Gersick & Associates 100 Whitney Avenue, Suite 1 New Haven, CT 06510 p: 203-497-8855 f: 203-781-2747 lga@lgassoc.com www.lgassoc.com

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FAMILy BUSINESS CONSULTANTS
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Edward Rosenfeld, Family Business Consultant Guiding Family Business, From now to next Takes collaborative approach and pairs up as a team with other key advisors who have complementary skills and knowledge. This assures that best practices are used and ensures quality and perspective is always maintained. 2578 Broadway, Suite 116 New York, NY 10025
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Predictable Futures Inc.The Business Family Center 10104 103rd Avenue, Suite 1211 Edmonton, AB T5J 0H8, Canada p: 780-702-2499 f: 780-428-1410 Gordon Wusyk, President solutions@predictablefutures.com www.predictablefutures.com Reece & Associates, PA 800 East Washington Street, Suite C Greenville, SC 29601 p: 864-233-6648 f: 864-233-3706 Ronald C. Reece, Ph.D. reece@ronreece.com www.ronreece.com

Family Solutions Group See listing under Family Business Consultants.

thE FAMIly BuSInESS nEtWORk

ed@edwardrosenfeld.com www.edwardrosenfeld.com

212-579-2613

The Family Business Network 23 chemin de Bellerive - P.O. Box 915 Lausanne 1001 Switzerland
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Olivier de Richoufftz, Executive Director or@fbn-i.org www.fbn-i.org

FAMIly BuSInESS SPECIAlIStS

+41 21 618 0605 f: +41 21 560 42 25

ReGENERATION Partners LLC Offices in Dallas,TX Raleigh, NC and Scottsdale, AZ 3811 Turtle Creek Boulevard Suite 300 Dallas, TX 75219 p: 800-406-1112 James Olan Hutcheson jim@regeneration-partners.com www.regeneration-partners.com

Rothstein Kass 1350 Avenue of the Americas New York, NY 10019 p: 212-997-0500 f: 212-730-6892 Paul H. Rich, CPA, CM&AA, Principal Emeritus prich@rkco.com www.rkco.com Transition Consulting Group, Ltd 17 Gryzboska Circle Framingham, MA 01702 p: 508-875-7751 Paul I. Karofsky, Founder & CEO David M. Karofsky, President David@ForTCG.com www.FortcG.com Transition Dynamics Inc. 101 Venice Avenue West Suite 22 Venice, FL 34285 p: 941-480-1119 f: 941-488-8465 Bonnie B. Hartley, Ph.D. bbh@transdyninc.com www.transitiondynamicsinc.com Working Systems, Inc. 4545 42nd Street, Suite 201 Washington, DC 20016
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Hemenway & Barnes LLP See listing under Attorneys. Relative Solutions, LLC See listing under Family Business Consultants.
FAMIly OFFICE MAnAGEMEnt & SEARCh COnSultAntS

Relative Solutions, LLC We collaborate with multi-generational families and their businesses to: Create systems to facilitate shared governance Design and implement succession plans Design and implement transition plans Empower next generation leadership
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The Rankin Group Ltd. A national executive search and organizational development firm for Wealth Management organizations, Single/Multi-Family Offices, Family Businesses. Focus on family office assessment and management; talent evaluation and management team development; and executive search. P.O. Box 1120 Lake Geneva, WI 53147 p: 262-248-5005 f: 262-248-6035 M.J. Rankin, President mj@trgsearch.com www.trgsearch.com
FAMIly WEBSItES & IntRAnEtS

201-385-5104 f: 201-385-5017 Fredda Herz Brown, Ph.D. Fran Lotery, Ph.D. Carolyn D. Greenspon, MSW, Associate Kathryn D. Linden, MSW, Associate Ilene Weingarten, MA, MFT, Associate info@relative-solutions.com www.relative-solutions.com

Kathy Wiseman, CEO kathy@workingsystemsinc.net Andrea L. Rubinfeld, Partner andrea@workingsystemsinc.net www.workingsystemsinc.net

202-244-6481 f: 202-812-1449

FAMIly BuSInESS DynAMICS

TrustedFamily TrustedFamily provides secure family websites & intranets. Rue Provinciale 62 1301 Wavre, Belgium
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Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers.

Edouard Thijssen, CEO edouard.thijssen@trustedfamily.net www.trustedfamily.net

FInAnCIAl SERVICES

+32 473 378 323

Coyote Financial, Inc. See listing under Business & Estate Planning Consultants.

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The Haverford Trust Company See listing under Wealth Management. Wilmington Trust FSB, New Jersey 902 Carnegie Center, Suite 460 Princeton, NJ 08540-6530
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InVEStMEnt BAnkInG FIRMS

Sean S. Murray, President smurray@wilmingtontrust.com Wilmington Trust Wilmington Trust provides comprehensive financial services including commercial banking, investment management, fiduciary & planning, private banking services to family-owned business owners and other professionals. Wilmington Trust Company Rodney Square North 1100 N. Market Street Wilmington, DE 19890-0001
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609-395-9052

GOVERnAnCE

The DAK Group 195 Route 17 South Rochelle Park, NJ 07662

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Continuity Family Business Consulting See listing under Family Business Consultants. The Family Business Consulting Group, Inc. See listing under Family Business Consultants. Hemenway & Barnes LLP See listing under Attorneys. The Legacy Associates, LLC See listing under Family Business Consultants.
InSuRAnCE SERVICES

Alan J. Scharfstein, President ascharfstein@dakgroup.com www.dakgroup.com

201-712-9555 f: 201-712-9557

de Visscher & Co. See listing under Family Business Consultants.

Brian D. Bailey, Vice President and Delaware Market Leader bbailey@wilmingtontrust.com www.wilmingtontrust.com Wilmington Trust FSB, Pennsylvania 797 E. Lancaster Avenue Villanova, PA 19085-1598 p: 610-520-1458 Jeffrey J. Culp, President jculp@wilmingtontrust.com Wilmington Trust FSB, Maryland Harborplace Tower 111 South Calvert Street, Suite 2620 Baltimore, MD 21202-6120
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302-651-1204

Dresner Partners Mergers & Acquisitions, Financings, Corporate Finance Advisory and Valuations 20 North Clark Street, Suite 3550 Chicago, IL 60602 p: 312-726-3600 f: 312-726-7448 Stephen Mullin, Director of Information & New Business Development stevemullin@dresnerco.com www.dresnerpartners.com

Coyote Financial, Inc. See listing under Business & Estate Planning Consultants.

Jack E. Steil, President jsteil@wilmingtontrust.com

410-468-3071

About this Service Directory

A basic listing in this service Directory costs $350 (same ad copy for five issues). subscribers to Family Business Magazine receive the discounted rate of $250. Firms wishing to supplement their basic listing pay an additional charge of $20 per word for the enhanced portion of their listing. changes to a firms directory listing prior to the annual renewal date cost $25 per item changed. readers can view the websites of firms listed here by accessing their listings on the Directory of Advisers page of the Family Business website: www.familybusinessmagazine.com. Family Business makes no independent evaluation of the firms or their services. Add your logo to your listing! cost is $100 for color; $50 for black and white. For information, contact Barbara A. Wenger at (800) 637-4464, ext. 6072 or bwenger@familybusinessmagazine.com.

MidMarket Capital Advisors, LLC Good advice based on current market knowledge and depth of resources. 1629 Locust Street Suite 400 Philadelphia, PA 19103 p: 215-875-8201 f: 215-875-8186 Patrick Hurley, Managing Director phurley@mmadvisors.com www.mmadvisors.com
lEADERShIP DEVElOPMEnt

Executive Advisors See listing under Family Business Consultants. Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. FamilyBusinessCoach.TV See listing under Executive Coaching.

www.familybusinessmagazine.com

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LEADERSHIP DEVELOPMENT
CONTINuED FROM PREVIOuS PAGE

Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers.

Brandywine Mergers & Acquisitions, LLC 645 Swedesford Road Malvern, PA 19355 p: 610-408-0554 Frank Michel, CEPA fmichel@vrbrandywine.com www.vrbrandywine.com The DAK Group See listing under Investment Banking Firms. Dresner Partners See listing under Mergers & Acquisitions. Kreischer Miller See listing under Accountants. MidMarket Capital Advisors, LLC See listing under Investment Banking Firms. Rothstein Kass See listing under Family Business Consultants.
MultI-FAMIly OFFICE

Bruce Johnsen & Associates

824 Munras Avenue, Suite G Monterey, CA 93940 p: 831-373-5969 f: 831-373-4604 Bruce Johnsen bruce@brucejohnsen.com www.brucejohnsen.com Predictable Futures Inc.The Business Family Center See listing under Family Business Consultants. Relative Solutions, LLC See listing under Family Business Consultants. The University of Illinois at Chicago Family Business Council See listing under Academic Programs/ Family Business Centers.
MAnAGEMEnt COnSultInG

Family Wealth Collective 200 East Randolph St., Suite 2400 Chicago, IL 60601 p: 312-540-9840 f: 312-269-2895 Teresa Cherry, CFP, CM&AA, Principal tcherry@familywealthcollective.com www.familywealthcollective.com

Asset Management & Family Office One Tower Bridge 100 Front Street, Suite 1111 West Conshohocken, PA 19428
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Stephen Kitching, Managing Partner info@gkfo.net www.gkfo.net Hemenway & Barnes LLP See listing under Attorneys.

610-341-3900 f: 610-341-9455

Executive Advisors See listing under Family Business Consultants.

MEDIAtIOn

Century Wealth Management 1770 Kirby Parkway, Suite 117 Memphis, TN 38138
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John G. Wofford, Esq.

13 Cottage Street Cambridge, MA 02139 p: 617-661-3200 f: 617-661-3201 John Wofford, Sole Proprietor johnwofford@earthlink.net
MERGERS & ACQuISItIOnS

Jay Healy, President jay@centurywealth.com www.centurywealth.com

901-850-5532 f: 901-682-1822

Laird Norton Tyee 801 Second Avenue, Suite 1600 Seattle, WA 98104
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Patti Dill, Director of Wealth Strategy p.dill@lntyee.com www.lntyee.com

206-464-5265 f: 206-464-5268

American Fortune Mergers & Acquisitions Maximizing Business Value Transferring Business Success 505 Third Street, Suite 301 Louisville, KY 40202
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Private Counsel Group 1170 Peel Street, Suite 300 Montreal Quebec H9W 5S2 Canada
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Brian Mazar, MBA mazar@fortunebta.com www.fortunebta.com

502-244-0480 x24 f: 502-244-6360

Mark W. Auger Vice-President, Managing Partner mark.auger@gcp.desjardins.com www.gestionpriveedesjardins.com/index. jsp?langue=en

514-985-4052 f: 514-985-1853

Pitcairn A leader in the multi-family office serving multi-generational families and single family offices. Providing investments, comprehensive planning, fiduciary, wealth administration and customized education services and administration services, filling one need or providing a customized suite of solutions. One Pitcairn Place, Suite 3000 165 Township Line Road Jenkintown, PA 19046-3593 p: 800-211-1745 f: 215-881-6092 Rebecca Meyer, Managing Director clientservice@pitcairn.com www.pitcairn.com

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Threshold Group 3025 Harborview Drive P.O. Box 2358 Gig Harbor, WA 98335 Two Liberty Place 50 South 16th Street, Suite 3525 Philadelphia, PA 19102 Christopher J. Phillips, Managing Director Marketing & Communications
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National Funeral Directors Association NFDA is the worldwide resource and advocate dedicated to high ethical standards and helping members provide meaningful service to families. 13625 Bishops Drive Brookfield, WI 53005 p: 800-228-6332 f: 262-789-6977 Barbara Gamez, Marketing Director nfda@nfda.org www.nfda.org
PRIVAtE EQuIty CAPItAl

River Associates Investments, LLC 633 Chestnut Street, Suite 1640 Chattanooga, TN 37450 p: 423-755-0888 f: 423-755-0870 Mark Jones, Partner mjones@riverassociatesllc.com www.riverassociatesllc.com
SuCCESSIOn PlAnnInG

Capital Advisors Ltd. See listing under Wealth Management. Continuity Family Business Consulting See listing under Family Business Consultants. Coyote Financial, Inc. See listing under Business & Estate Planning Consultants. Executive Advisors See listing under Family Business Consultants. Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. The Family Business Consulting Group, Inc. See listing under Family Business Consultants. Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers.

cphillips@thresholdgroup.com www.thresholdgroup.com

253-857-1602

Wilmington Family Office Wilmington Family Office provides sophisticated interdisciplinary advice and customized family office services to preserve the lifestyles and legacies of ultra-affluent families. Rodney Square North 1100 North Market Street Wilmington, DE 19890-2800 p: 302-651-8151 Jack P. Garniewski, CPA/PFS, CFP Managing Partner, Wilm. Family Office jgarniewski@wilmingtonfamilyoffice.com www.wilmingtonfamilyoffice.com
ORGAnIzAtIOnS

Gen Cap America 40 Burton Hills Blvd., Suite 420 Nashville, TN 37215
p:

Chris Godwin, Senior Vice President cgodwin@gencapamerica.com www.gencapamerica.com

615-256-0231

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615-256-2487

High Street Capital

11 South LaSalle, 5th Floor Chicago, IL 60603 p: 312-423-2650 f: 312-423-2655 Joe Katcha, Principal Joe@HighStreetCapital.com www.Highstreetcapital.com Center City Proprietors Association 1528 Walnut Street, Suite 910 Philadelphia, PA 19102 p: 215-545-7766 f: 215-545-3634 Shannon Fulforth, Membership Coordinator ccpa@centercityproprietors.org www.centercityproprietors.org Family Business Center of Loyola University Chicago See listing under Academic Programs/ Family Business Centers. Family Business Network USA (FBN-USA) See listing under Academic Programs/ Family Business Centers.

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D i r e c tory o F ADvisers
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Hemenway & Barnes LLP See listing under Attorneys. Kreischer Miller See listing under Accountants. McNabb Advisors See listing under Family Business Consultants. Predictable Futures Inc. The Business Family Center See listing under Family Business Consultants. ReGENERATION Partners LLC See listing under Family Business Consultants.
WEAlth MAnAGEMEnt

EisnerAmper LLP See listing under Family Business Consultants. Wilmington Trust Wilmington Trust provides comprehensive financial services including commercial banking, investment management, fiduciary & planning, private banking services to family-owned business owners and other professionals. Wilmington Trust Company Rodney Square North 1100 N. Market Street Wilmington, DE 19890-0001
p:

The Haverford Trust Company Three Radnor Corporate Center, Suite 450 Radnor, PA 19087 p: 888-995-5995 f: 610-995-8796 Joseph J. McLaughlin, Jr., Chairman & CEO jmclaughlin@haverfordquality.com www.haverfordquality.com Laird Norton Tyee See listing under Multi-Family Office. Pitcairn See listing under Multi-Family Office.

Brian D. Bailey, Vice President and Delaware Market Leader bbailey@wilmingtontrust.com www.wilmingtontrust.com Wilmington Trust FSB, Pennsylvania 797 E. Lancaster Avenue Villanova, PA 19085-1598 p: 610-520-1458 Jeffrey J. Culp, President jculp@wilmingtontrust.com Wilmington Trust FSB, Maryland Harborplace Tower 111 South Calvert Street, Suite 2620 Baltimore, MD 21202-6120
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302-651-1204

Capital Advisors Ltd. Worth Magazines Nations Most Exclusive Wealth Advisors - Six Consecutive Years. 1115 Tower East 20600 Chagrin Boulevard Shaker Heights, OH 44122 p: 888-295-7908 toll free; p: 216-295-7900 f: 216-295-8300 Neil R. Waxman, Managing Director nwaxman@capitaladvisorsltd.com www.capitaladvisorsltd.com Coyote Financial, Inc. See listing under Business & Estate Planning Consultants.

Spruce Private Investors, LLC 2970 Peachtree Road, N.W. Suite 265 Atlanta, GA 30305 p: 404-961-0006 f: 203-428-2628 Courtlandt B. Ault, Director cault@spruceinvest.com www.spruceinvest.com Threshold Group See listing under Multi-Family Office.

Jack E. Steil, President jsteil@wilmingtontrust.com Wilmington Trust FSB, New Jersey 902 Carnegie Center, Suite 460 Princeton, NJ 08540-6530
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410-468-3071

Sean S. Murray, President smurray@wilmingtontrust.com

609-395-9052

DISPLAy ADVERTISER INDEx

Benchmark Email . . . . . . . . . . . . . page 13 www.Benchmarkemail.com Bessemer Trust . . . . . . . . . . . . . . . . . page 3 www.bessemertrust.com David Bork. . . . . . . . . . . . . . . . . page wm10 www.davidbork.com DrinkerBiddle . . . . . . . . . . . . . . . . page 21 www.drinkerbiddle.com EisnerAmper . . . . . . . . . . . . . . . page wm8 www.eisneramper.com Family Business Consulting Group . . . . . . . . . . . . InsIde front cover www.efamilybusiness.com Family Firm Institute . . . . . . . . . page 27 www.ffi.org Family Office Wealth Management Forum . . . . . . . page 15 www.iifamilyofficeforum.com Foundation Fighting Blindness page 43 www.blindness.org GKFO LLC . . . . . . . . . . . . . . . . . . . page wm6 info@gkfo.net Glenmede . . . . . . . . . . . . . . . . . . page wm7 www.glenmede.com Harris myCFO. . . . . . . . . . . . . . . . . . . page 9 www.harrismycfo.com Harris Private Bank . . InsIde back cover www.harrisprivatebank.com Hawthorn . . . . . . . . . . . . pages wm4-wm5 www.hawthorn.pnc.com Hemenway & Barnes LLP . . . . . . page 7 www.hembar.com Heritage Publishers . . . . . . . . . . page 29 www.HeritagePublishers.com Pitcairn . . . . . . . . . . . . . . . pages wm2-wm3 www.pitcairn.com Prowell Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . page wm9 www.prowell-financial.com PwC . . . . . . . . . . . . . . . . . . . . . . . . back cover www.pwc.com/us/private Saul Ewing LLP . . . . . . . . . . . . . . . page 11 www.saul.com Stetson university . . . . . . . . . . . . . page 5 www.stetson.edu/fec

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Family Business March/April 2012

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profile
By Sally M. Snell

A 116-year-old product is now trendy

a century ago, New England pharmacist James P. Whitters invented a nasal irrigant to treat colds, allergies and sinus problems. Today James (Jim) Whitters III, who kept the small family business alive to honor his grandfather, is sniffing out new distribution outlets in response to a spike in demand. The nasal rinse, called Alkalol, has been sold at CVS stores (in the pharmacy department) since 2010. It is also available online at CVS.com, Amazon.com, Drugstore. com and Walgreens.com, and at regional chains such as Bartell Drugs, Harmon Stores and USA Drug. In 1896 the first James Whitters developed Alkalol in the attic of the Taunton, Mass., drugstore where he worked. He encountered doctors who complained that all the nasal irrigation products on the market at that time had too much alcohol or glycerin, says Jim, a retired lawyer. Nasal irrigation has been used for centuries to flush mucus and irritants out of the sinus cavity. But ingredients used in irrigation products in the 1890s caused the nasal passages to dry out and become susceptible to bacteria, explains Jim, 72. James P.s product is a formulation of essential oils, extracts and salts with antiseptic and antifungal properties and only a trace amount of alcohol. Jims son, James Whitters IV, describes it as saline rinse 2.0. Interest in sinus rinses has skyrocketed since 2007, when medical commentator Dr. Mehmet Oz discussed the benefits of neti pots and nasal rinses on an Oprah appearance. While The Alkalol Company has benefited from the publicity, it has had to compete with larger companies. Five or six years ago you would go into a [chain drugstore] and their
ore than

sinus rinse category would be maybe one product or two products, says James, 40, the companys vice president. Its now six feet long. It frustrates me that Alkalol isnt up there, says Jims daughter Katie Vaughn, but its because were competing with these huge [pharmaceutical] companies, and they can get shelf space much more easily than

I get calls all the time on our consumer telephone line where people say its the only thing thats ever worked for them, says Jim. S i n c e 1 9 7 7 , t h e p ro d u c t h a s been manufactured and distributed by Denison Pharmaceuticals in Pawtucket, R.I. In 2010, Alkalol introduced packaging that included a nasal wash cup, so consumers need

James Whitters III with his son, James IV; his daughter, Katie Vaughn; and grandchildren. They use social media to discuss Alkalols benefits with consumers.

we can. Jim and his son and daughter are The Alkalol Companys only employees. James Whitters II, who took over the company in 1937, took a 19thcentury approach to marketing, says Jim. James II, who died in 2005, focused on medical professionals rather than consumers. We inherited a company that had a great product, James says, but I would liken it to a house that needed to be taken down to the studs and rebuilt. Today James, a former journalist for the Boston Globe, uses social media to discuss sinus health. Katie helped build the companys website.

not purchase a neti pot. The companys revenues for 2010 were $1.5 million, up from $1.1 million in 2009, according to the Whitters family. They say they are in discussions with national retailers and project sales to grow to $5 million in five years. My seven-year-old daughter has said to me, Mom, someday I would love to run The Alkalol Company, says Katie. I think that would be really cool if someday our kids are still part of the company and its still FB in the Whitters family. n Sally M. Snell is a writer based in Lawrence, Kan.
www.familybusinessmagazine.com

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profile
By Carol Brzozowski

Robert Is Here, along with his family

near Everglades National Park in Florida City, Fla., a large sign atop a farm stand proclaims, Robert Is Here. F i f t y - t w o y e a r s a g o , Ro b e r t Moehling, age six, was instructed by his father to sell the family farms cucumbers at a roadside stand. No one stopped. His father figured drivers couldnt see the young boy, so he painted a
t a n i n t e r s e ct i o n

you with something youve never seen before, says Moehling. The stand sells citrus, mangoes and produce with exotic names such as Monstera Deliciosa. Milkshakes are made to order. Also for sale: preserves featuring Moehlings mothers recipes, honey infused with fruit flavors, pies, flowers and firewood. Theres a petting zoo, and musicians perform on weekends. The fruit stand was born of neces-

Robert Moehling, in center, with his wife, children and grandchildren. He started as a six-year-old boy selling fruit by the side of the road.

sign with Robert Is Here in large red letters. The next day, the youngster sold all of the cucumbers. Roberts school bus picked him up and dropped him off at the fruit stand. At age nine, he hired a neighbor to work while he was in school. At 14, he bought 10 acres and planted avocadoes. He now owns 40 acres. Today, Robert Is Here Fruit Stand and Farm is a South Florida landmark that attracts locals and tourists from around the world. The farm ships fruit all over North America. Weve always grown tropical fruit. Our place is a mecca for tomatoes, lettuce and fresh vegetables, so its inevitable were going to surprise
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family Business March/April 2012

sity. It was a business the family had to have to keep their head above water, Moehling says. Moehling and his wife, Tracey, have four children: Brandon, 29; Victoria, 27; Robert, 26; and Savannah, 22. They started working the farm at age 11. At 14, each was given an avocado grove to tend. After college, they all returned to the farm to work. E ve n t h e t h i rd g e n e ra t i o n i s involved: Moehlings three-year-old grandson works on the farm and punches a time card. Moehling has pushed through challenges, such as zoning issues and crop freezes. The most devastating year was 1992. His mother was mur-

dered by an intruder. (The murderer was never caught.) Then, a few days later, Hurricane Andrew struck. My house was gone, the barns were gone, Moehling says. The fruit stand was severely damaged. Mom was gone. The kids werent old enough to help me out. After the 1992 tragedies, Moehling planned to move to Oregon. His neighbors convinced him otherwise. He and his family grew our roots back, he says. Moehling says he capitalizes on everyones strengths. There are so many facets to what we do, he says. I cant do any of this myself. They cant do it without me. The farms marketing efforts have moved beyond a hand-lettered road sign. A few family members created a website, www.robertishere.com. Moehling, who doesnt use computers, has never seen it. Moehling knows his business is unusual: Many South Florida family farmers have sold their land for development. Whats more, all four of his children work in the business. Its up to them to make it go another 50 [years], he says. Brandon Moehling says cant envision working for anyone else. I love the freedom of our own business. I love the farming, he says. Were custodians for the next generation. I hope all of my sons pick it up. The 100-hour work weeks are difficult on the spouses and children, Brandon concedes. We get through it, he says. Were a very strong and proud family. Very cocky sometimes. We know we [sell] a good product. We work hard and FB we party hard. n Carol Brzozowski is a freelance writer based in Coral Springs, Fla.
photo: kayla kelley