Selling a father's painful legacy - selling a family business

Nation's Business, Sept, 1988 by Jean K. Mason

Selling Father's Painful Legacy

Family business may be the backbone of American, but it also can be the repository of unresolved family tensions and conflicts--conflicts that can create obstacles to achieving even the most reasonable goals.

Selling the family business might seem like a reasonable goal. But, as I was to learn, selling a generations-old, privately held company poses challenges far different from those of the immense, newsmaking corporate transfers. The headlines suggest that selling a company is a common event with a set course of action and with experts at hand. But for me, selling the business that my family had inherited was a once-in-a-lifetime event.

As a psychologist, I knew little about the myriad procedures that would be required. Nor did I know that I would become an integral part of the sale process. I did know that I needed more than financial wizards; I needed a reliable adviser--a Sherpa--to guide me through this complicated, emotional maze.

A century-old company, I cam to realize, has not only a financial, personnel and product history, but also a family history. My family's decision to sell our father's legacy was agonizingly hammered out not in the boardroom but in my kitchen. The decision was the culmination of years of guilt, anger and resentment as well as pride, profit and achievement.

Along with my borther Ray, in London, my sister Joyce and mother's two trustees, in Boston, I "controlled" 49 percent of the 180,000 outstanding shares of a metal-fabricating company in Missouri. But long before we could approach the market, tightly enmeshed business and family relationships had to be untangled.

It was in March, 1981, that I joined the board as the only family member among nine directors of the company. In its early decades, the little hardware and cornice shop had provided a modest living for three partners. But by the end of World War I, it was barely supporting my father's widowed mother, uncles and cousins in their German-immigrant community.

My father--ambitious, hardworking and humorless--stepped in at age 20. With great energy and budding talent, he expanded the company's manufacture of tinware, doors and gutters to include products with complex metal-bending requirements.

Slowly, debts were retired, and the company was relocated to larger quarters several times. In the 1920s and 1930s, my parents bought the relatives' stock as rapidly as their Depression budget permitted.

Father, a self-made man, breathed fire into the tiny job shop. By World War II, the company was producing parts for automobiles, farm machinery, vending machines and appliances. What remained a well-guarded secret was that its president's personal and domestic life was deteriorating. Not an unusual story.

The year 1941 ushered in a decade of events that had an impact on the company and the family into the 1980s. Father gave 53 percent of the stock as gifts in equal amounts to his wife and three minor children. It was an act of panic designed to shelter income, mandate continuity and ensure succession. But in return, he demanded of us unquestioning loyalty and prompt return of his stock cif I should so much as ask." My teenage protests went unheard; with characteristic Prussian determination, he asserted total authority over his wife, children and employees.

But he miscalculated the extent of his control over his children. One by one we refused to submit to his commands--"Return the certificates in the next mail!" or "Arrive here tomorrow to apologize in person for your defiant disrespect!"

Any illusions of a smooth transfer of power were dispelled once and for all when his only son flatly refused Father's enticements to join the company. Then, regretting his largess, Father arbitrarily rescinded some of his gifts of stock, which later were restored by a court. And, according to his fluctuating affections, he augmented others. In a final act designed to exclude his children, he created a voting trust, to which he assigned his own, his family's and his executives' stock. For 25 years, the company would be run by an inhouse committee of five.

Longstanding marital tensions ended in my parents' divorce and a bitter financial settlement. My father twice remarried, acquiring along the way another child, a stepsister I did not meet until 1985. Father's death in 1951 ended a decade of upheaval that, for him, included illness, drug abuse and alienation of his children.

The family dispersed: Father's competent associates dealth with postwar prosperity and the reality of managing a company controlled by nonvoting absentee owners. Joyce, Ray and I, as well as the trustees for our mother--now a nursing-home resident--received our small but welcome quarterly dividents. The company grew to three plans and 400 employees. Professional management replaced the committee. Our stock appreciated.

In 1981, I became a director. I was 57, a clinical psychologist, a consultant to Boston-area schools, an amateur cellist, a mother of three, wife of a Harvard Medical School psychiatrist and filmmaker. My knowledge of the metal-stamping business amounted to what I had learned in my childhood and from occasional visits and attention to company affairs in later years.