STEVEN was a very successful entrepreneur in the packaging business. He has a wife, Mary and two sons, John and Wilson, who used to be close to each other.
The packaging business had grown very large over the years and got listed five years ago. By that time, Steven was 59 and had intended to hand the reigns to his two sons when he became 65. Both of them were bright sparks who had graduated with honours.
However, John, the elder boy by one year, was not interested in getting involved in his father’s business and preferred to pursue a career as a professional accountant. He started his own accounting practice and got married shortly after that. To a woman the father disliked. He considered her a conniving woman with shallow thinking.
Wilson, on the other hand, was happy to get into the business and became in charge of sales and marketing.
The father was hoping that John would eventually get into his business as the financial man and that would have been ideal for him – two trusted lieutenants, one overseeing the frontline and the other running the operations.
Try as he might, he could not persuade John, who would not budge. Over the years, Steven had passed on a fifth of his shareholding in the holding company to each of his two sons.
He was sad to note though that John in recent years had been picking quarrels with Wilson at family gatherings. Until both of the sons were no longer on speaking terms.
One day, Steven called me to meet him about his succession plan for the business in case he passed away. Over a private dinner, he confided to me that he was, while at the pinnacle of his business venture, very unhappy about his two sons’ relationship with each other.
He was very concerned that distribution to both of them could end in breakup of the business. I told him that I would talk to both of them as it may be difficult for them to open up to their old man.
After talking to John and Wilson separately, it soon transpired that Wilson had no problems with John, whom he continued to respect and look up to as his taiko, but John had niggling suspicions about Wilson.
It turned out that John’s negative feelings towards Wilson arose mainly from prodding by the wife who was always suspicious of her brother-in-law. With raising of questions like why was Wilson ‘abusing’ the company’s resources by frequently using its high-end cars, buying expensive corporate gifts and lavish entertainment at fancy restaurants and nightclubs.
At my next meeting, I told Steven about the underlying cause and suggested that he bring John on the board of the holding company of the listed company. I also asked him to call for monthly meetings where he and Wilson could brief the family on business developments, financial performance and issues confronting the business. He bright-eyedly accepted the idea.
Two years later, I bumped into Steven and he thanked me profusely. He told me that over this period, John became familiar with the father’s business strategies and understood why his brother did what he did.
The packaging business was highly dependent on several large Japanese clients whose head office visitors expected to be entertained quite extensively and in a rather plush manner. Over time, John began to take interest in the business and the father felt that John would be ready to take over as the number one by the time he retired.
It is good that this particular case had a happy ending. Simply because of transparency and getting buy-in from the outsider son.
This Q&A Column in published as a joint public service and educational initiative with Rockwills Trustee Bhd. Please email your questions related to estate planning to [email protected] or Rockwills’ training and business development assistant general manager Sam Chan ([email protected]).