There are many ways to destroy a family business. One of the surest is to get your son to run it.
Izzy Asper made his son Leonard chief executive officer of CanWest at the advanced age of 35. You didn't have to know a thing about the business to guess that this was probably not a quality decision. It's a nasty world out there. Sooner or later, somebody was bound to come along and take away his toys.
Izzy was a scrappy son of immigrants who grew up scraping gum from movie-theatre seats. He drank martinis by the bucket, took insane risks, loved a fight and terrorized his staff. "Do that again and I'll cut your nuts off," he would e-mail them.
Leonard is a nice guy. In business, that is not an asset. Izzy used to eat nice guys' gizzards for lunch. For years, he swore he'd never let his kids run the company. But his dynastic longings got the better of him. He overrated the talents of his children (as so many of us do). And Leonard - like many sons of strong, successful fathers - was obsessed with proving himself to the old man.
Poor Leonard. Even smarter business minds than his would've had a tough time salvaging CanWest. Seduced by the folly of convergence, Izzy had bought Conrad Black's newspaper chain at the top of the market. It was a reckless deal. Leonard piled his own mistakes on top. And now, instead of cursing his father for mortgaging the family's future, he's cursing himself for letting the family down.
"Shirtsleeves to shirtsleeves in three generations," warned Samuel Bronfman, the tough old bootlegger who founded Seagram Co. "I'm worried about the third generation." Little did he know how right he was. Mr. Sam was a sucker for genetics too, and eventually endorsed his grandson, the star-struck Edgar Jr., to take over.
Edgar Jr. vowed not to go down in history as the Bronfman who "pissed away the family fortune." And then he did. He took a flier on the global entertainment industry and lost billions. It was one of the biggest disasters in modern business history. At least the Bronfmans eked out one more generation than the Aspers did.
The Thomson empire is a notable exception. It has grown and flourished as the Eatons, the Bassetts, the Crosbies and the Woodwards all collapsed. (The Thomson family, of course, has an interest in The Globe and Mail.) Ken Thomson had the wit to realize that he was totally unsuited to succeed his hard-driving father, Roy. He hired other people to run the business and became chairman of the board instead. It was one of the most inspired business decisions of all time.
There won't be much left for the Asper family after the yard sale at CanWest. Maybe that's just as well. Rich families are often unhappy ones. Edgar Bronfman Sr. (the father of Edgar Jr.) said the dynasty's collapse is almost a relief. "I'm glad that there isn't any Seagram to leave to [the grandchildren]" he told business writer Brian Milner. "You know, this whole question of entitlement and that they're the Seagram Bronfmans or whatever is not a good thing. … It's much better not to have that as a legacy."
Bill Gates, Warren Buffett and Peter Munk believe so too. They have no intention of burdening their kids with the business or with big inheritances. "Leaving a large sum of money in their hands, which they have not earned, was an absolute no-no," Mr. Munk said. Perhaps not coincidentally, all his children have succeeded on their own.
Some people argue that in the name of social justice, we need inheritance taxes to redistribute people's private wealth. But the heirs to family fortunes have generally proved quite capable of redistributing the wealth all by themselves. So don't envy people who were born into the Lucky Sperm Club. Chances are, some day they'll be no better off than you.Report Typo/Error