WITHOUT any doubt, five of the biggest challenges and risks that keep founders and business leaders awake most nights are family relationships, business continuity, leadership succession, wealth preservation and ownership transition. It does not help that a number of major successions is slated to happen in Asia within the next five to 10 years. That’s because many Asian business dynasties were set up right after World War II.
According to Family Capital, the founders who are now reaching the end of their line, if caught unprepared, will have no other option but to confront these imminent succession problems soon. Facing these avalanche of issues late in the cycle is a huge gamble where founders will likely lose. My oft-repeated advice is this: Start your succession early, as early as when you were starting your business. And stop procrastinating.
Are the fears of business owners real? Absolutely! Unknowingly, it’s the most successful leaders who sow the seeds for the downfall of a family business.
Here are some of the reasons:
· Business leaders continue to have full control and are not giving an inch of decision making to the offspring.
· Leaders are more fixated on growth and expansion and their investments are geared towards revenue and growth.
· Leaders looked at people policies as cost centers rather than human capital investments.
· Family members are likely entitled and may not have any experience working outside the family business.
· Some siblings are working and others are not but are likely getting equal pay.
· Some are not on good terms, a clear manifestation of a simmering sibling rivalry.
· The offspring were promised future ownership by reason of birthright.
· The market environment is highly volatile.
· Non-family professionals are not empowered.
· The business lacks a sense of direction.
With all this avalanche of issues, ownership and succession problems will naturally follow. There is now the gloomy prospect that if you die tonight, everything you’ve worked for will just disappear—in an instant. These fears are real and I am sounding the alarm bell to every family member with the warning directed to family leaders that have made their businesses successful, accumulated significant wealth but are woefully unprepared when the “WHAT IFs” happen.
Perfect case of hell on earth
Mayfull Foods Corp. is a US$3 billion business and one of Taiwan’s biggest food importers of meat products. Established in 1963 as a professional food supplier, it is heavily involved in wholesale, food service, retail, logistics and hotels and the family is behind the famed Miramar Group.
Its conflict is far worse than the Yanson family dispute I wrote about in my previous article. It is a lesson for founders and business leaders not to take succession for granted. The tragic event was not just a ticking time bomb but a real fireball that detonated immediately after the patriarch’s death. Without any form of succession plan in place, everything about the Mayfull family just went terribly wrong and proved fatal.
Shortly after the death of Mayfull’s founder, Huang Jung-tu, a meeting took place among his six sons to discuss how to split the inheritance left by their father.
According to the China Post, after a heated argument, the fourth son, Huang Ming-Te, 54, pulled out a glock pistol and shot his older brother. Another brother who was then chairman of Mayfull Foods, in a bid to stop and pacify Ming-Te, ended up being shot point-blank as well. There was carnage in the conference room with two men dead, all shot at close range in the head. When the police arrived, a chase ensued. After being cornered on the top floor, the gunman Ming-Te inched closer to the window where he decided to end it all—putting a bullet to his head. That bloody scene that happened a few years ago was the culmination of a bitter family dispute. A case of poor succession gone horribly wrong.
To be continued...
On Aug. 31, 2019, I will be sharing the stage at Manila Marriott with the president of the Institute of Corporate Directors and a visionary/founder whose company is an industry market leader 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 Flor at 0922-860-3186 or register at email@example.com.