He Tells the Boss That His Kid Can't Cut It; Five Questions; Lawyer Ben Keller Talks Succession Planning at Family-Owned Firms
Gallagher, Jim, St Louis Post-Dispatch (MO)
Bennett Keller brings up "The Godfather" a lot. In the old mob movie, he sees himself as the consigliere.
He's the counselor the wise lawyer who stands a little apart from the family of wise guys and gives advice.
In real life, Keller is a lawyer at Lathrop & Gage in Clayton. But his practice takes him to the spot where business and family mix, and not always happily.
That's a little like the plot of the 1972 Francis Ford Coppola- directed classic. The Corleone operation was a family business, with non-family employees. Crisis arrived by surprise as the Godfather got whacked. The company had a management succession issue, a major reorganization, and killer competition.
Keller's specialty is counseling family-owned business of the honest sort. Much of it involves planning for the day when the matriarch or patriarch moves on. Keller says he's counseled more than 100 firms.
Will the sons and daughters take over? Are they qualified? What should they do with all the cousins who own little pieces of a third- or fourth-generation business.
Should the old folks simply sell it all to the highest bidder?
Plan well in advance, Keller advises. Get a good management team in place, be it made up of family members or outsiders. Decide the governance structure: how the next generation will pick leaders and make decisions.
Family businesses are in Keller's blood. His father and uncle ran a couple of small groceries in Wellston and on Cass Avenue in the city.
"I'd go to work there and, at the end of the day, my uncle would say that, because of all the taxes they had to withhold, I owed him money. My uncle was very funny," says Keller.
Keller also learned a life lesson. "I watched my dad work seven days a week knowing everybody and giving credit to people.
"For the longest time, I never valued the things he did. But he instilled in my sister and me the idea that there's nothing wrong with working hard."
- Lots of people work for family-owned companies, but they're not members of the family. When the old owner decides to pack it in, does the transition go smoothly to the younger generation? Should employees stick around to find out?
It depends on the family. Sometimes this is initiated by the kids who say, "It's time." Sometimes it's by the parents who say it's time.
If it's initiated by the parents, it will probably go smoothly. They feel it's the right time to do it.
When it's initiated by the kids, they may feel they haven't been recognized economically, or they think their parents are going to hang on forever. Then it may not go so smoothly. When the younger generation is asking all these questions, the older generation will band together and say, "These young whippersnappers want to take things over!"
Most people, thinking logically, would agree that it's good to plan for this in advance. Most times it's some third party a business adviser or a lawyer who will get the planning going. I'll ask an owner, "What would happen if you're not here anymore?" I'll get a blank stare.
I ask if they have an organization chart. They laugh at me. They say, "I make all the decisions." OK, you have three kids coming into the business. Where will they fit in? Then I get the look that says, "I see what you're talking about."
It takes a strong look in the mirror. Can we realistically transition it to someone else? Do I have a management in place that can do it?
It becomes more difficult the more diluted the gene pool gets. You may have two brothers and each has three children, and all six are active in the business. But you can have only one president.
- As an employee, how worried should I be about this?
If you're looking at the company as a long-term gig, and you see your employer hasn't planned for any transition, that is a telltale sign that, somewhere along the line, something bad is going to happen.
A lot of times, a long-term employee will have a special relationship with a patriarch or matriarch. …