Soriano: When inherited wealth can destroy a family



The betrayal of family stings worse than all others. It breaks a secret code. Why do family-run businesses so often fail to transition to the next generation? Why are siblings frequently riven with intrigue, machinations, conspiracies and deep-seated hatred?

One of the top stories that circulated in the business community the past few weeks was about a feuding family. The last name may not ring a bell to many, but the family through its group of bus companies is the country’s biggest operator of buses carrying a quarter of a billion passengers annually all over the archipelago.

The group is popularly known for its Ceres Liner and Vallacar Transit. It is headquartered in the birthplace of my mother, Bacolod City, a highly urbanized city located in the southern part of the Philippines and operates a fleet of 4,800 buses nationwide. Its closest competitor, Luzon-based Victory Liner, has close to 800 bus units. This is the Yanson Group, in almost every which way, a corporate fairytale. Till a few weeks ago, that is.

Death strikes a blow

From my experience helping Asian families restore broken relationships and heal old wounds, I suspect that at the heart of the struggle is a cast of obsessive siblings, meddling in-laws, ambitious advisers, spin doctors and a reclusive matriarch powerless to bring about a rapprochement between her warring children.

The long-running saga has now taken an ugly, even sinister turn. The simmering rivalry between the siblings, four against two including the matriarch threatens to rock the empire to its foundations and throw up some very dirty linen in very public spaces.

Last week’s remark by the new president that there were “trust issues” against the ousted president brought into the open what was suspected ever since Ricardo Yanson Sr.’s death in 2015: that the battle for control of the spoils that afflicts most Asian families, when a powerful patriarch passes away, had visited itself on the country’s most admired transportation company.

What may have started as petty misunderstandings among siblings during childhood turned into a volatile brew. Eventually, the conflict turned into a hostile corporate takeover by one group initiated by the four siblings. This brought into the open the messier underpinnings to the conflict and offered a revealing glimpse into a longstanding and successful family business that has been haunted by internal squabbles.

The stakes are massive. On top of the billions of pesos worth of assets, the split is still unofficial for now as the court is still evaluating the positions of both parties, yet inevitable after last week’s development where the company president, younger sibling Leo, was ousted in a boardroom brawl. This action has cast a shadow over the Yanson empire and raises uncomfortable questions about its future. The current battle extends beyond the two warring sibling groups. It has spilled over to other stakeholders caught in the cross-fire. And the most vulnerable are the 18,000 employees whose lives are entirely dependent on what will eventually play out in the coming months.

The Cause and Effect

What really caused the meltdown? A generational transition is a critical point in the life cycle of a family business. Business owners believe they have a foolproof succession plan in place, but problems arise when the founder dies and carelessly passes the torch to a successor that may not be acceptable to the rest of the family. As the business transitions from first generation (owner-managed) to that of sibling partnership (second generation), careful collaboration is needed to accommodate the diverging needs of the surviving spouse and the adult children.

To be Continued...

On Aug. 31, 2019, I will be sharing the stage at Manila Marriott with prominent governance leaders / family business owners in the biggest Family Business gathering in the Philippines. In the public event entitled, “Can Family Run Businesses Last Forever? I will share the secrets in building 100-year-old enterprises. Seats are limited. To reserve, please call Aira at 09228603186 or register at events@wongadvisory.com.

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