The Peril of Collusion in Family Business

In the following family, once again, the father is performance oriented; and the mother is more focused  on the relationship between her children, but their problems are more complex and far harder to resolve:

After Alice and Harvey retired from their family real estate business, their older daughter, Susan, and her husband, Ed, continued to work in the business, as did their only son, Kenny. Ed was always highly effective but was also emotionally and psychologically overbearing towards Kenny, who was not much of a worker. Alice and Harvey had two other daughters, both younger than Kenny. One worked outside the business; the other was a stay at home mother.

Because Kenny was their son, Alice and Harvey were never able to come to terms with his weaknesses. They compensated him commensurately with Susan, a much harder worker. Although they didn’t accept Ed’s behavior towards Kenny, they liked that Ed generated a lot of money. Comfortable with their cash flow, they were never able or willing to resolve the tension or to make a decision about who would eventually end up with what stock.

Kenny is now in his fifties, and Susan and Ed are close to sixty. Recently, Harvey died and Ed became terminally ill. Alice, influenced by her two other sons-in-law, decided to split the stock among her four children. Unsurprisingly, Susan feels betrayed by Alice’s decision. She and Ed worked their entire adult lives for the family business and were never able to get any kind of footing. Not wanting to spend the next twenty years of their life making her brother and sisters rich, her only alternative is to sell the business.

The primary source of the family’s problem is that Kenny never wanted to work in the family business. He was forced into it by Harvey, who believed it was Kenny’s responsibility to work in it. After refusing to pay for Kenny’s college tuition, Harvey disapproved of Kenny’s poor performance in the business, not realizing that Kenny was acting out his anger at his father by not performing. For a man, independence is the root of self esteem. Kenny felt emasculated for years.

The parents’ failure to assess honestly Kenny’s talents, weaknesses, and desires, and to respond accordingly, underscores the importance of original placement. Alice colluded with Harvey. They both remained in denial about the consequences of forcing Kenny to work in the business. Worse, they let the conflict fester unresolved for thirty years. When they were ready to pass the business onto their children, the issue came back to haunt the whole family.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  For more visit:  www.patriciaannino.com




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