The following is an excerpt from On the Shoulders of Atlas: A Story about Transitioning a Family-Owned Business.
It tells the story of Victor Banks, entrepreneur, founder and owner of Atlas Plastics, his wife Anne, and his children Anthony, Rose, Caitlin, and Robert. Mr. Banks put in 80-hour weeks and slowly built his company from a small family business into a global powerhouse with sales of more than $200 million. Three of the children work in the business, one doesn't. All are wondering what their father plans to do next. Will he keep the business and grow it? Will he sell it? Livelihoods and careers depend on his decision. But Mr. Banks can't see a clear way forward.
Mr. Banks may be fictional but the issues are commonplace, and the expert advice in the book can be applied to any company. This is the second of three parts that ran yesterday, continues today, and ends Wednesday. It's part of Chapter 7 by Linda Betts, president of Heritage Wealth Strategy Group Inc.
It was in a meeting with Ron that Victor's children first learned about the original estate freeze Victor had done and about the old trust, of which they were the beneficiaries. I had given much thought to how to bring this up, and I had discussed it in depth with Victor and Anne. It's a complicated discussion-how do you talk to children as beneficiaries of a trust valued at almost $200 million without immediately engendering feelings of entitlement and endangering their work ethic?
We decided to explain in carefully chosen words exactly what the words "in trust for" mean. We'd emphasize that the trust was discretionary and that it meant no beneficiary actually would own any of the trust's assets until they were distributed.
Once Anthony, Rose, and Caitlin were comfortable with me and trusted that I was there for the good of their family and not just as Victor's agent, they opened up. In many ways, they were a great family, a strong family. They worked together day in and day out, and they still talked to one another! I've seen many families in which the siblings are barely civil to one another.
New information and insights emerged. Anthony was actually the kin-keeper of his generation. His difficulty with Michael was based not so much on jealousy of Michael's talents and unabashed ambition (though there was certainly an element of that) but more on anger and frustration at how Michael took Rose for granted. This sort of thing happens often - bad feelings between family members get played out in the business even though they didn't originate there. Anthony also knew more about Robert's problems than anyone else, though he'd kept what he'd known to himself.
Caitlin made a personal, revealing, and ultimately important revelation. "What I might want to do is what my mother did - raise my children and be part of my family. Now that I'm pregnant, maybe I'll have a chance to do that. But if you're not in the business, as far as Dad is concerned, you're not part of the family. Just look at Robert - my father doesn't have the time of day for him."
Why was this important? Because it brought to light the fact that, in this family, there was no recognized, articulated, safe way to say, 'Hey, I don't want to work in the company."
Anne's concerns about Rose's marriage were well-founded. Rose told me she thought the marriage was salvageable, but she wasn't 100 per cent sure.
Robert remained a wild card. He was affable and charming but didn't give much away except that he "requires" a lot of money to live and wasn't earning income consistently because "the right job hasn't come along yet." Robert was clearly a special case.
Anne confirmed much of what Ron had told me about her and confirmed my first impressions of her. She was deeply committed to her husband and family, and she sometimes felt these commitments pulling her in two directions. I also learned how important her volunteer work with the Canadian Mental Health Association was. She said, "I guess most people have a reason for the charitable causes they choose, don't they? Robert is my reason."
Victor and Anne said that they wanted all the children to be treated equally, but they were concerned Robert might squander any wealth that came his way.
"I'm also worried Robert could be disruptive as a major shareholder. I don't want the people working in the business to be distracted, and I think Robert could make a real nuisance of himself if he becomes a major shareholder," said Victor.
Anne especially wanted Robert to have a chance to engage and invest in his own future. They decided that if he didn't - or couldn't - advance, he might have an equal financial opportunity, but the form of his entitlement would be different than that of the other children: outside the business and/or in a life trust. This was more of a tendency toward fairness than toward absolute equality.
Special to the Globe and Mail
Excerpt from On The Shoulders of Atlas reprinted by permission. Copyright 2010 Susan Latremoille & Peter Creaghan with Frank Archibald, Linda Betts, Arnie Cader, Sheila Crummey, Tony Ianni, Steve Landau, Ron Prehogan, and Pearl Schusheim .