Podcast: Managing Family Dynamics in Business Succession Planning

By Noah Rosenfarb
Published: February 18, 2014 | Last updated: March 21, 2024
Key Takeaways

Wealth brings complexity. In this podcast, Matthew Wesley, a family succession expert, shares his experiences in managing the dynamics of a family business.


In this session you will learn about:

  • 3 things most families can do to maintain family harmony;
  • When you should talk about your exit plans with your family – Matt gives us some valuable tips;
  • How to deal with perceptions that “money is negative”;
  • How to go about starting family meetings; and
  • How owners can make sure their legacy is long-lasting and positive.

About the Guest

Matthew Wesley of The Wesley Group works with successful families and their leaders to build capacities that will sustain wealth across generations. Based on an extensive theoretical knowledge and extensive involvement in consulting with various families, companies and organizations, he directly engages the human issues that matter most to families.


Listen Here:

You can also get this Podcast by:


Read the Full Transcript Here:

Noah Rosenfarb, CPA: We’re excited to have with us today an expert in the design and implementation of transformational family gatherings, Matt Wesley. So Matt, maybe you could start by sharing with us what you think are the three most important things families can do to maintain family harmony.


Matt Wesley: Noah, thanks very much. It’s a great opportunity to be with you and your listeners. Obviously family harmony is something that’s critically important to family leaders as they move forward in designing whatever exit strategies they’re thinking about. The research shows that families that manage to sustain wealth or keep businesses going over time do a few things really, really well.

First, they communicate in ways that create trust. The biggest reason that family businesses fail and that family’s fall apart is the failure of trust, and oftentimes that’s rooted in failures of communication. And so the first skill that a family needs to develop and needs to sustain is that degree of trust.

The second thing that they do extremely well is they build a family identity. And to illustrate that a bit, there was a family that I was working with a while back, and they were in their 4th generation. And we’ll just give them the name, the founder’s name, Smith. And by the time the 4th generation had come around, there wasn’t a single member in the family that had the last name of Smith. And yet, all of them referred to themselves as the Smith family. That name the Smith family held for that family a whole host of values, and meanings, and ways of behaving, and expectations that held the family together.

And so there’s a sense of pride that these families have, a sense of strong family identity. And the third thing is that family’s that succeed over time not only have this sense of tribal identity, but they also do a great deal to encourage and celebrate individuality. One of the worst things that can happen in a family is for the dreams of the individuals in later generations to be squelched. And so there is a tremendous emphasis, not only on the belongingness to the family, but also on the autonomy on the individuals in the family itself. And so i would say trust, family identity, and autonomy or strong individuality are three hallmarks of maintaining family harmony over time.

Noah Rosenfarb, CPA: And what do you think, in terms of each of those? I mean, you could either share a story or an example. What are ways that families can actually do that? How do they fluster creating trust through great communication and building family identity, and encouraging and celebrating individuality?

Matt Wesley: That’s an excellent question. Communication is one of the diceyest pieces I find. Typically individuals in families have very specific roles that they play. And part of the goal of family communication is to break out of those roles. So, for example, in one family that I was working with, one of the children had a role of always being the responsible child. And that role was so defining who they were in the family. And they were so much larger than that role in the rest of their life, but the family had them locked into that piece. And so the goal was to really help that person express clearly who they were and how they were.

And we got at that through a series of assessments, through some good family conversations, through some visioning work that we did. And at the end of the day, not only that person, but other members in the family who had been kind of typecast were able to break free of those roles and begin to express their individuality. That created a greater degree of trust, both on the part of the people who were breaking out of their roles, and also the people who were able to see them in new ways. It opened ground for people to see the authenticity of the other people involved, and to trust that person more. It also began to shift the family identity to some degree, because the stories that they had been telling about each other were too small for the family as a whole. And so the end result was they began to develop a different sense of who they were. So they moved from a family that saw themselves as kind of narrow and constrained, to a family that was much more flexible and capable of dealing with tension and conflict than they had thought possible. And so that was kind of a trifecta. It opened up trust and communication, created family identity, and it also helped each person individuate and differentiate more within the family.

Noah Rosenfarb, CPA: It sounds like those are the reasons why you kind of pin yourself with having transformational family gatherings, not just a regular old family meeting.

Matt Wesley: Yeah, exactly. And we may want to talk a little bit more about the family gathering experience. I find that oftentimes when people hear the words meeting they think of agendas and a kind of business format. My experience with families is that they’re much more like tribes. And what you really want to do is gather them as a tribe and have an experience together that’s out of the ordinary, and that requires the family to engage differently with one another. So the gatherings oftentimes have a lot of play, a lot of fun, but it’s meaningful play and fun, and it allows people to gain new insights into each other and into how they work together as a family.

Noah Rosenfarb, CPA: So Matt, maybe following up on that, describe how would someone go about starting to have a family meeting or a family gathering?

Matt Wesley: Typically there are a couple of choice points that you have, I think. First of all, it’s what kind of gathering do you want? Do you want a business meeting? Do you want something that’s fairly structured, or do you want to do something that’s a little bit more likely to kind of shift some things at a more fundamental level? If you’re interested in doing the latter, the important thing is to understand the capacity that your family has to do that. And what I typically recommend is that those meetings be facilitated. Typically the family leader is not in the best position to facilitate the family gathering.

First of all, it’s important that they participate as a person in the meeting. And it’s very difficult to be both a participant and a facilitator. The second thing is that they’re often too close to the situation, and they don’t really see all of the dynamics that are happening. And the third piece of it is that the family will oftentimes, against the will of the family leader, which does not foster the kind of communication or family experience that the family leader’s really hoping for.

So typically you want to find a skilled facilitator who can come in and help, first of all, design a family meeting that’s going to be specific to the family’s needs, whatever those might be. And second of all, who can come in and facilitate something that will be useful, and constructive, and positive for the family, and allow it to grow and change in measured and thoughtful ways. Oftentimes these things can end up either becoming so camped down that nobody is making any real progress, or they end up being explosive. And you do more damage than good. And so a skilled facilitator will be able to weave their way between those two so that the meeting is productive and people walk away feeling as though there was something useful happened, and at the same time that the family wasn’t out of control, the meeting wasn’t out of control, or bad things happened, a bad situation was made worse.

Noah Rosenfarb, CPA: Can you give me an example of a first meeting that you facilitated and maybe some stories you can share about either a success or a problem?

Matt Wesley: Yeah, absolutely. First of all, when I do family meetings, no two are ever the same. But a recent meeting that I did with a family, there were six children. Four of them were married. And so this included all six children plus their spouses, plus the mom and dad. And the family was comprised of very strong individuals, people who were very, very different and didn’t really see the world in the same way. There were some childhood resentments that existed within the family, and some things that were problems from way back, and some animosities, different factions. There were feelings of favoritism, some of the children felt as though mom and dad were favoring other kids over them and that sort of thing.

And what we ended up doing was spending a day and a half together and developed when I call the covenant of right relations, which is basically a framework for communication within the family. And we spent a good long time doing that, and then the following day, in the second day of the event we practiced communication among the family. And some air was cleared, but it was done in a really constructive and helpful way. And the family has since then, using that covenant and referring to it as they relate to each other.

Noah Rosenfarb, CPA: Do you find that families have an event like an exit of a business that kick off their desire to have these family gatherings? Or is there a wedding, or funeral, or is there something that precipitates the first family gathering?

Matt Wesley: Well, almost always my clients are at some level feeling stuck. And in family businesses, what I find is that stuck-ness oftentimes arrives during transition. So, moving from one generation to the next, the sale of the business, something is going on that is precipitating the need for conversation. Sometimes it’s a crisis, oftentimes it’s more a sense that things are not going as well as they would like. And they want to make sure that they’re laying some good groundwork for whatever that transaction might be, and reducing potential for controversy down the road. And so from my perspective, there’s usually some reason that people are calling me related to an event, but it varies a lot. And the interventions vary even more based on what the family’s current adaptive challenges actually are.

Noah Rosenfarb, CPA: So, in talking about these events and family meetings, when do you advise owners to discuss their exit plans with their family?

Matt Wesley: Well, you know, I find most often that people approach this as though it was supposed to be in a bench row than a process. So they often think that there’s a specific time when they should declare pretty much everything to the family. In my experience, that is rarely the right solution. And so families, I think, by their nature are anxious systems. There’s a lot of anxiety floating around in the family system. And a giant disclosure like this only becomes an occasion for that anxiety to really flare up. So that anxiety often shows up as either conflict or avoidance. You either get outright dissention and disagreement, or a lot of backstabbing.

Or you just have people clam up and they don’t want to deal with things, and they avoid the conversation. So these kinds of stress can spin up the anxiety within the family, and it just goes out of control. What usually helps with that anxiety, as a matter of fact I think it almost always helps with the anxiety, is to have a well-designed process that provides structure for those disclosures. So the disclosures don’t become an event, they become a process. And so what happens in those situations is that the family leader is slowly disseminating information over time. And what that does is it allows the family to acclimate to the information as it comes out, and it also allows the family leader to test how all that information is landing. Who is it that’s interested, who isn’t interested, why aren’t they interested, how can you begin to create some vibrant conversations around some of this stuff so that it’s really having a good effect? And if you begin to look at this as a multi-year process as opposed to an event, then I think you’re miles ahead.

And to just illustrate this, I have a couple of families that I have worked with, one family is in the middle of a generation two to generation three succession, and the pivotal event is the retirement of the two brothers in generation two. And the one brother’s desire to have his own son take over the business. That has proven highly controversial within the family, and it was announced in a very short time period without a lot of preparation. And so the end result is that the family is spinning itself up and very, very concerned about this succession plan. And it’s put a lot of the family, it’s put the company in jeopardy, it’s put family relationships in jeopardy, and I’m being asked to come in and help structure some things so that the family system can move forward, and the business can survive this transition.

In another case, I’ve been working with a fellow over the course of the last three years, and he’s been slowly and methodically educating his children about the nature of the business, beginning to disclose we’re now in year two of this process and we’re beginning to disclose financial information and beginning to help people understand and read the balance sheets, understand the dynamics of the business. Some of the kids were more interested than others, but all of them are moving along. And he’s able to sit down with those who aren’t as interested and help them through it, and also put some advisors around those kids if they need to understand the financials so that even if they don’t have any inherent interest in the business, they’re getting good advice. And so the idea is that this is a much more methodical and thoughtful process, and the end result is that it’s going much more smoothly than the first example.

Noah Rosenfarb, CPA: And that’s why we’re here trying to promote Divestopedia, and getting owners to be thoughtful about their planning, and spend some time before a transaction or a transition to actually plan for these events. It sounds like you recognize it takes some time to drip the information out to the families. Because if you drop a bomb, you’re going to get a reaction that you might not like.

Matt Wesley: Exactly. And I don’t know about you Noah, but my experience is that good exit planning at minimum takes three to five years. Has that been your experience?

Noah Rosenfarb, CPA: Yep, I would say. Especially when we’re talking about sophisticated families and companies. Which brings me to another question, just as it relates to money and the size of the businesses that you and I deal with. A lot of the owners that I speak with, they’re concerned that money might be a negative thing to their family. So what advice do you have for families that share that concern?

Matt Wesley: Well, that’s a really interesting question. I have to say that one of the core concerns that my clients have is around entitlement, and what that means, and how to avoid issues surrounding entitlement in the next generation or the generation after. As you and I both know, and probably all your listeners know as well that money is really neither positive nor negative, it’s a tool. It’s a way of operating in the world, and it’s a resource to getting things done. And while it may sound obvious, families that succeed over time define their wealth as more than money. While I find that a lot of clients talk that way, they say, yeah there are things that are more important than money, in terms of the way that they practice, everything they talk about in their family gatherings has to do with the money. What I see successful families doing over time is that they talk about their resources very differently.

And one way to conceptualize this is just to see that there are different types of, for lack of a better term, capital in the family. Families that view their wealth more broadly ask how they can use the financial assets to build these other types of capital. Now what do I mean by that? Well, first of all, they’re the individuals within the family. We talked earlier about the importance of individuality. And if you think about it, every family has it’s human capital. That’s probably it’s most valuable resource. The people who are in the family and who are functioning in the family, and you want the individuals in the family to be strong, capable, healthy, productive folks. And so that’s the first critical form of capital.

The second is that sense of identity that I talked about earlier, the culture of the family. That there are strong values, good communication, and lots of good, strong identity within the family. And then the final piece of it would be the way that things are structured, the family businesses, the trust, the ecosystem of the advisors that the family has, and so on and so forth, the connections with boards and maybe non-profits in the world. And so when you look at a family that defines its wealth in terms of the people in the family, the culture of the family, and the structures that the family is maintaining, all of a sudden have a much more robust view of wealth. And so the financial assets, to some degree, become a resource for investing in those various types of capital. And as with any other investment, you really want some well-defined expectations and outcomes within those areas as you’re investing in the human, social, and cultural capital of the family. And if you’re investing in those things you would want to be seeing, for example, with human capital, you’d want to be seeing the people in your family becoming more productive, and happier, and engaged with life.

If you’re investing in the cultural capital, you want to see the family developing a deeper sense of identity and cohesion. And if you’re investing in the social capital, you should be seeing the family more effectively connect with their advisors to the philanthropic world and so on and so forth. Families that start engaging in that process tend to have much less difficulty with entitlement over time, because they’re viewing the financial assets not as an end in itself, but as a means to building these other kinds of resources with accountabilities going back and forth within the family.

Noah Rosenfarb, CPA: Do you have a success story to share about a family you worked with were they came in and maybe their children or grandchildren had certain entitlement issues, but through a process they came out the other end with a renewed kind of vision and appreciation for their wealth?

Matt Wesley: Yeah, I think so. It’s interesting. Entitlement is really difficult. Once it’s started, it’s very difficult to begin to turn around. That said, I think it can be done. And the way to do it is by setting up degrees and levels of responsibility within the family. So one of the things that is very, very useful in these kinds of situations is what I might consider a family bank. And you can set this up either formally or informally. But the idea is that if somebody needs money within the family, they would go to a committee of other family members who would then make a decision as to whether or not to fund that person’s request. And so the idea is that what you’re doing is you’re empowering that person to accomplish a genuine dream that they have as opposed to enabling them by just simply giving them money.

A couple of examples, one family I worked with set up an educational trust, and that educational trust required that when anybody would go off to college, what they would do is apply for a loan to go to school. They would then make certain commitments to the trust, to the trustees or the committee that was dispersing these funds, and those commitments included things like maintaining a certain GPA, getting through school in a particular amount of time, so on and so forth. And those agreements could be tailored for each individual. If they honored those commitments then they would still be entitled to receive funding for the next year of college of if they began not to keep those commitments, then there would have to be a conversation around it.

When the kids graduated from school, what they would then do is go out into the workforce. There’d be no repayment obligation immediately, but by the time they hit their late 20s or early 30s, they’d be required to pay it back. And the reason they had to pay it back was because the family had invested in them, and in their education, and therefore they had an obligation to make sure that that money was available for the next generation to invest in them. And so you’re building this degree of human capital. You’re not enabling them, you’re empowering them by giving them an opportunity to get an education. You also have some accountability in play so that they’re not just simply receiving the money without strings, there are definite strings, but they’re not controlling strings. They’re the kind of strings that create a fabric of commitment and responsibilities back to family as opposed to somebody telling somebody what they should do. And then you’re building family culture. You’re saying this is a family that values education and thinks that education is important and should be promoted within the family. So that was one example.

Other examples, there was one family where one of the kids had wanted to actually build a little music studio in his garage, and asked his parents for the money. And his parents said no we’re not going to give you the money, but why don’t you go to your grandfather. And what the grandfather had the sense to do, and this was not so much my advice, but as this began to take shape I began to work with this because it was such a brilliant thing that the grandfather did. He basically said to his grandson, put together a business plan. And here are the names of the advisors that I work with. Go talk to my lawyer, go talk to my accountant, and come back with a business plan. The kid did it. I think the grandfather thought this kid’s not going to take it anywhere, but he did. He went and created the business plan, brought it back to his grandfather. His grandfather began to go through it and work with it, and then funded it. The kid started a music studio and it turned out that all these garage bands that were in the area needed a place to record music. So they can record there for not very much money, and this kid ended up putting himself through college on the revenues from this little music studio. And when he left for college he turned it over to his brother, and his brother put himself through college. So the amount of learning that happened in that was extraordinary. And it’s a way to battle that sense of entitlement. It required hard work. It required diligence. It required some real effort to move that forward. I think the worst thing that parents can do is just give the money to their kids without expectations of responsibility and commitment and accountability coming back.

Noah Rosenfarb, CPA: Yeah, I totally agree. Those are great stories. Talking about a family bank, maybe you could share a little bit about different family governance structures and how families go about choosing how they’re going to run their family, if they’re going to be autocratic or democratic.

Matt Wesley: Sure, yeah, absolutely. What I’m finding is that there’s a real shift in the way that families are looking at themselves. I think if you look at the greatest generation, there was a kind of benevolent autocratic approach. So the idea would be that I as a family leader know what’s best for my family, and I’m going to make the decisions. I’m going to create my estate plan, and my kids will learn about it at some point maybe when I’m dead, maybe beforehand, but they’re not going to have much say in how I put my estate plan together or what I do with my business, and so on and so forth. I think with the baby boom generation there is such a desire for higher collaboration with the kids on the whole. Now, obviously there are expectations all over the place, and that’s true with the prior generation as well, but it’s a trend.

I see baby boomers looking to create much more collaborative environments. And so what I’m seeing is that families are beginning to put together collaborative decision making processes. I think each family needs to find its own best approach. Clearly when you get to a generation three or four where you have lots of peasants who may or may not know each other, you have to move to some sort of a formal governance system that has some level of representative structure to it. I find though, even in 2nd generation families, oftentimes what you’ll find is that a group of the kids are oriented, say, towards philanthropy, another group may be oriented towards business. And it’s best to follow the natural inclinations of the children to a large degree.

So you may require that kids who are interested in philanthropy spend a little bit of time getting to know the business and understanding the business, but it’s best to let them go to town on the philanthropic pieces and allow them to learn what they need to learn to do that work. And vice versa for the kids that are interested in the business piece, let them spend most of their time in the business world with a little bit of an understanding of what’s going on within the philanthropy. So the key, then, is to have regular gatherings where the family’s communicating about all the various things that they’re doing and working on. And where those accomplishments can be celebrated going forward. Again, families are much more like tribes than they are like businesses, and so to consider having a family council meeting is not a bad way to go when you have a relatively small family, say, up to 20. After that you have to start getting a little bit more formal about the whole thing.

Noah Rosenfarb, CPA: So if one of our listeners is planning to exit their business, have this significant liquidity event, take the time to take care of their family, and some multi-generational planning, what are the things they should be doing to make sure their legacy is long lasting and positive?

Matt Wesley: That’s an excellent question. Again, coming back up to the first piece that I talked about, there is, I think, a need for communication and trust for the family. So that’s the first job, is to make sure that the family’s communicating well and is moving forward in a way that is positive. The second thing that I think that I would encourage them to do is to make sure that the family’s discussing the questions that matter, the questions that are really going to be making a difference. One of the key things, if there is a liquidity event, is how should that money, the assets be divided among the children, and a really critical question is how much of that money should be set aside for the family as a whole?

So when I was doing estate planning, I was an estate planning attorney before I started doing this work. I would often ask clients to envision if they had three children that they would divide their estate into four shares. There would be one share for each of their children, and one share for the family. And we would decide later what the amounts in each of those would be, but I would ask them to dream about what they would do with that fourth share, how would they invest that money in their family going forward? And what I encourage them to do was bring their children into that conversation. And as a matter of fact, that’s how I got into doing this work. We would have family meetings where the children would be active participants in the design and development of the parent’s estate plan. Now, some people would hold back quite a bit of information from their kids, others would disclose an awful lot of information, sometimes all of it. But the bottom line was that they were involving their children in the estate planning process, and that did a couple things.

First of all, it definitely shaped how they created their estate plans. Rarely would I find somebody coming in and saying that the plan that they ended up with was what they had thought they would end up with. The kids influenced it dramatically. The second thing it did was it created a great deal of buy-in on the part of the kid. And it reduced the potential for conflict after someone was deceased. And then the third thing it did was it actively engaged the kids, and what I found at least 7 out of every 10 times was that people would say, “Hey, why are we waiting until mom and dad are dead? Why don’t we start doing something now?” And so the end result was that philanthropies got started, kids started entrepreneurial funds, and started business with a little bit of participation on the part of the family and the business, so if the family funded a business, maybe the family would retain 20% of the value of the capital that went into the business, and as an equity investment, those kinds of things.

So the end result was that there was a lot of really good generative stuff that happened. And then the final piece of it is that the parents got to test drive their estate plan so that they were no longer guessing about how that would land, but they actually had good intelligence, and then they could come back and modify things later. So if they had a gifting program and one of the kids had squandered the money, that was useful information in terms of how they might want to think about their estate fund going forward. It was a really robust way to do estate planning, and so this whole notion of collaboration is critical. And a good place to start is actually after a liquidity event, is actually with the estate planning piece, and asking questions about how to use that money for the benefit, not only of the individuals within the family, but the family as a whole.

Noah Rosenfarb, CPA: I think you and I can agree that involving kids in estate planning is probably a best practice but not a common practice.

Matt Wesley: Right.

Noah Rosenfarb, CPA: So maybe you can describe what are the ways you think it could become more common? What are the conversations that owners should be having either with themselves and their spouses or their kids or their advisors to get them over the hump of thinking this is only for them?

Matt Wesley: Well, quite frankly I think it’s the attorneys and CPAs that are most at fault in this. Most attorneys and CPAs think of estate planning as tax planning, and that’s obviously a critical part. You want to pass on as much as you possibly can to the next generation, but very few attorneys or CPAs are thinking about the impact of the wealth on the family in the long run. And the psychological, as well as familial, dynamics of that transfer. It’s oftentimes heavy on the mind of the client, that’s really what they want to talk about, but they don’t know how to bring it up with their advisors. And they’re not sure how to being to have that conversation.

So the first and most important question I would say for business owners is to find advisors who get the whole question of wealth impact and are willing to go down the path with the business owner, or to find consultants who are willing to help think some of this stuff through. A big chunk of it has to do with just the shift in mentality around what estate planning really is. I think if you look back, traditionally, an estate was obviously a large chunk of land. And several hundred years ago estate planning consisted in how do you steward the land through the next generation? And how does that land continue to be productive for the family going forward?

With the advent of liquid wealth, that model changed dramatically, and it all became about passing money on. Looping estate planning back to a notion of stewardship, at some level of another, is a big mind shift for both clients and advisors, and beginning to think about that as a way of looking at estate planning again will, I think, create a much more holistic approach. Not that we can ever go backwards. I’m not advocating a kid of romantic notion of estate planning, but rather a notion that this is really a legacy and a resource for the family going forward. So thinking 7 generations down the road is important. And it’s just the way people approach these things.

Noah Rosenfarb, CPA: That’s great. Maybe in addition to all the great information you shared so far you could talk a little bit about maybe a story that might sound to one of our listeners like something they can associate with, whether facing a difficult decision, or maybe you can kind of go both ways and tell a story about one person who made the tough decision and even though they were concerned about the consequences they took action. And maybe another story about an owner that knew they were in a difficult spot but decided not to face the challenge head on?

Matt Wesley: Sure. Well, you know, it’s interesting. Most of my clients, and I have to say the reason they’re hiring me is because they’ve got the courage to address the issues they know need to be addressed. And it does take a degree of courage and vulnerability. You have to have a willingness to admit that you don’t have all the answers. So one client that I worked with was a fellow who had a business that was an operating business. He was looking at transferring it to the next generation. He had two sons and one daughter. The daughter and one of the sons was involved in the business and very, very interested in running the business. The daughter was actually the more capable of the two and more likely to be the person to eventually run the business, but she wasn’t ready. Dad was getting a lot of pressure from mom to begin to retire and slow down, and he was, I think, ready to do that as well. Also, like almost all business owners, wanted to stay in the saddle to some degree or another.

And so what we ended up doing was we ended up structuring over the course of some very long and at points difficult conversations a process whereby he would begin to exit the business and begin to move more into the role of chairman of the board, with minimal presence in the day-to-day operation of the business. And that was tough for him. It was very difficult for him. And it turned out to be difficult for his wife too. His wife was heavily invested in being the wife of the CEO of this business. And it gave her certain payoffs in terms of social status and all the rest. So it came as a surprise to her that while on the one hand she wanted her husband to slow down, on the other she didn’t. And there were these competing commitments that she was dealing with, so she had to work through some of that stuff. And we worked through that together.

The other thing that we did was we decided that it would be really useful to bring in an outside person as a temporary CEO. And this is actually a solution that a number of people have adopted, and I think it can be quite useful in certain circumstances. So the idea is that it’s very difficult to mentor your own children adequately. You can do it up to a certain point, but after that it’s difficult. And so we brought in a third party who took this fellow’s daughter under his wing, and spent five years helping her develop and grow into the CEO she is today. The business is thriving. The brother is doing really well. He’s actually doing what he loves, which is the marketing side of the business, and she’s obviously running the business as CEO. The third child has never been involved in the business, but is a passive investor. And what we did there was work with him around issues of ownership and understanding what the difference is between ownership and management. He actually sits on the board, which is useful.

One of the things we did too was we brought the board. Dad’s role became, as chairman of the board, to develop a good, strong-functioning board going forward. And so he brought on some outside folks and created a little board of advisors to start. And a couple of those people are actually serving on the board. So it was kind of a win-win-win all the way around. People who don’t do it well just by in large bury their heads in the sand and hope for the best. And I think you and I’ve both seen that happen over and over again. I think if someone picks up the phone and calls us, they are concerned about the exit strategies, and if they’re open to coaching and advise then they oftentimes will do quite well through those transitions. And those that don’t want to face it, the consequences come down on their families later on.

Noah Rosenfarb, CPA: Well, one of the things I feel is that it’s kind of never too late. That no matter the crisis’s that pass or the intervention that needs to be had, there’s still an opportunity to right the past wrongs and move forward as a family, and maintain harmony, and create harmony towards the future. So have you had any of those experiences where maybe an owner was calling you and the impression was I know I’m calling you too late, I should have called you five years ago, but here’s my story?

Matt Wesley: Yeah, absolutely. And that family that I told you about before where he had decided on the succession plan and it was causing all sorts of family anxiety is exactly that kind of story. It’s a situation where he had already made critical and key decisions, and it had been done without adequate preparation, and so the family was in a degree of turmoil. And so coming in, a lot of it is about creating structures. And there in that family, one of the critical things is, again, developing a good, strong board of directors with some outside voices on it. There will be some other performance metrics around his son so that the family has confidence that the business will continue to produce revenues at a sustainable rate. A lot of people in the family depend on cash flow from this business, not to support themselves but to supplement their lives and the lives of their children. So it goes to things like private school tuition, or helps children afford a house they might not otherwise afford, be able to afford or take a vacation, or save for retirement. And so there’s a lot riding on it. And so creating those performance metrics.

So at that point, it becomes a question of what’s required to kind of begin to decrease the anxiety within the family, and then improve communication. So transparency about the business and what’s going on within the business, and developing routine processes for communicating within the family, and communicating honestly and with candor becomes critical. And again, structure is really useful for that.

Noah Rosenfarb, CPA: So it’s never too late?

Matt Wesley: It’s not. I don’t think it is. Unless you’re in the middle of litigation, it’s not too late. But unfortunately there are those stories out there. But as long as people are still not at each other’s throats, it’s not too late.

Noah Rosenfarb, CPA: So what else would you like to share with our listeners about maintaining family harmony either before or after an exit strategy or a transfer of ownership in their family business?

Matt Wesley: You know, that’s an interesting question. I would say a big chunk of this has to do with just enjoying each other in some important ways. The tendency is to get all knotted up around these issues of money and all the rest, and so the families that I know that do really well with this do spend time looking at that, and they’re willing to invest in that. But they also take trips together periodically. They hang out with their grandchildren a great deal and spend time with their grandkids. They spend time with their children. There’s a lot of together time, which isn’t to say that they’re intrusive, it’s just to say that there’s a spirit of celebration and joy, and a willingness to try and develop the relationships on a deeper level. I think it requires parents that they come to see their children in new ways. That the kids have almost always grown beyond what their parents have seen of them, and it’s difficult for the children to reveal their true selves to their parents, and so the parents need to give permission to the kids, and do that in ways that aren’t intrusive but allow the children to become seen by their parents and by each other.

Again, all those roles and the family stories that exist oftentimes block people into patterns that aren’t big enough for the family and who the family’s become. And so the question is widening their horizon and opening things up. And the families that succeed in doing that and spending good, quality time together in ways that are free and less structured are oftentimes the most successful families.

Noah Rosenfarb, CPA: Well that’s great. I thank you so much for being our guest today. Maybe you could share with our listeners if they wanted to design a transformational family gathering, how they might want to get in touch with you, or if they had questions about maintaining family harmony. What’s the best way for them to reach you?

Matt Wesley: Sure, well you know they could give me a call at (425) 647-6066, or send me an email to [email protected].

Share This Article

  • Facebook
  • LinkedIn
  • Twitter

Written by Noah Rosenfarb

Noah Rosenfarb
Noah Rosenfarb, CPA/ABV/PFS has devoted his career to advising business owners on all things related to money. He is a Personal CFO and Holistic Wealth Coach at Freedom Business Advisors, which provides middle market business owners guidance on how to successfully transition out of the management and or ownership of their company. Mr. Rosenfarb is the author of EXIT: Healthy, Wealthy and Wise.

Related Articles

Go back to top