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By Jill Hamburg Coplan
MARCH 29, 2000

Helping an Elderly Business Owner Let Go

Emotional -- not management -- issues are the most complex and require the most finesse


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Shutting down a doomed company is one of the hardest things that families in business will ever have to do. And no one takes the blow harder than the patriarch (less often, the matriarch) who built up the operation. This edited letter from a reader who married into a business family shows how important it is to persuade a parent to get out sooner rather than later:

My father-in-law owns a small manufacturing business that he inherited from his father. The business has about 20 employees, so with their families it supports about 100 people. The rest of my husband's family has turned their backs on the business because they feel it has no future. Witnessing the slow death of this factory has been horrible. My husband has taken time from his work to help. We don't believe the company can be saved, yet we can't bear to just walk away. Is there anything that can be done? We're afraid that if things continue this way it will fall to us to support his parents.

It's straightforward enough to engineer an acquisition or a merger, liquidate the company, find a buyer for the customer list, open a factory overseas, or become an importer instead of a manufacturer. "But the core problem here is way beyond business management," says Peter H. Calfee of Cleveland-based Family Business Advisory Partners. "There are emotions keeping the owner attached to the business while he's tanking it, and the current generation has found it hard to get their parents to discuss those sensitive issues."

As painful as it will be, it's time to bring the owner gently out of his state of denial, says Joe Astrachan, editor of The Family Business Review and Wakovia Chair Professor of Family Business at Kennesaw State University's Family Business Center. "When something is dying, our natural human response is to deny that fact. We don't prepare for death well, whether it's corporate or individual."

"I doubt the son has been able to express his fears and concerns for his father," says David Gage, a clinical psychologist and the founder and director of Business Mediation Associates in Washington, D.C. "It's a very difficult, sensitive conversation that needs to take place. I'm always surprised how frequently those conversations haven't happened in family businesses because one or both parties are afraid the message they have to deliver will be too hurtful."

WHAT'S AT STAKE? This shouldn't be a cruel confrontation. Adult children should use the conversation to explore what's at stake for their parents. "What is it that the father is running on? What's he holding on to? What's causing him to grasp so tightly?" Gage asks. Very often, people identify so strongly with the company that they feel as though they're signing they're own death certificate when they agree to close the company. In any case, it's crucial to win the owner over to a sale -- if a sale is viable -- before it's too late.

Whatever the owner's motivation for clinging to the company, that person stands a better chance of adjusting if he or she has a hand in the disposition of it, Gage advises. "If the company is really going downhill, he does have to let go of it -- before it's taken from him."

Be sure to involve the person's spouse. First, bring up the issue in a private conversation, then in a formal family meeting with the owner where all siblings and interested parties can discuss the future, express their worries, and give ultimatums if necessary, says Laura Michaud. She's the owner of a consulting and training firm for family businesses in Elmhurst, Ill.

COUNSELING. The meeting should be away from the home and the office and moderated by an outsider -- but not the company lawyer or accountant, Calfee says. That's because they've presumably failed in their role -- either because they never alerted the owner to the impending disaster or couldn't persuade him or her to act.

One option is a psychologist from the Family Firm Institute, a nonprofit, nationwide organization that charges about $250 an hour. The institute also runs educational programs. Or you can consult a local Service Corp. of Retired Executives volunteer, suggests Michaud, who herself is a third-generation owner of Beltone Corp. SCORE is a counseling service of the Small Business Administration. Be sure the volunteer has a background in family business.

Take action soon, Calfee warns. Right now, the family's paralysis is destroying the business, and some 100 people stand to suffer. After you broach this subject with your father-in-law, expect a trying period to ensue, so Gage suggests that you line up your own sources of emotional support.

The family's status as a contributor to the local economy need not die with the factory. A gift -- or if funds are sufficient, an endowment -- to an academy, museum, or charity in the founders' names can keep an appreciation of its role in the community alive for many years.

Jill Hamburg Coplan has covered work, family, business, and finance for the past decade as a writer and editor for newspapers, magazines, and wire services. She left Working Woman magazine, where she was senior editor, when her first child was born and now works solo from a home office in Brooklyn, N.Y.


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