The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

FAMILY-owned businesses should look to employ an outside practitioner to help manage their complex internal relationships, the head of a prominent Bahamian company telling Tribune Business: “The family dynamic is very different from a regular business.”

Franklyn Butler II, a panellist at a recent KPMG family business succession planning seminar, said a third-party facilitator had been key in helping manage complex issues arising out of the family component of this family’s well-know business, which began in 1920 and was incorporated in 1963.

Mr Butler said that following the death of his father, Franklyn Butler Sr, in 2008, at the age of 26 he was left to head the wholesale enterprise of Milo B Butler & Sons Co.

Mr Butler, who acknowledged that he comes from a large family, with numerous relatives holding interests in the business, said he eventually called on the services of Grant Walsh, director and founder of the KPMG Enterprise Centre for Family Business, to help manage the complex family component of the business as issues began to arise over the company’s future.

Mr Butler said establishing a Family Council, chaired by one of his uncles, was key to helping resolve a number of family issues within the business.

“Through the Family Council we were able to ascertain the sentiment of the family as it related to particular issues,” he explained. “Our biggest issue was around who wanted what in the business, and how do we bring a resolution?

“We had an ownership structure that was based on legal documentation, but also a family policy of inclusion where every member of the family should be involved in the business. All of my uncles and aunts were basically owners of the business, but they weren’t owners on paper. We wanted to include everyone in the family as an owner, but there were those who had issue with that.

“The Family Council helped a lot in trying to get people to realise that if you go after the legal documentation, many of them would lose, and it was in their best interest to accept what their parents had been accepting all along. We have began to bring some degree of harmony to the situation, where we were able to get consensus, because people began to have a voice and that was driven by the family council,” said Mr Butler.

In an interview with this newspaper, he said he would advise Bahamian family-owned businesses to bring in a third-party facilitator. “Always bring in a third party facilitator. What happens is we become too close to the emotional side and we forget the logic,” he explained.

“What Grant offered for us was some independent analysis. Quite often in family businesses we don’t want to accept the reality, because it’s too emotional. That third party helps to override and undermine what becomes just pure emotions and brings it back to logic and dollars and cents, depending on the circumstances.”

Mr Butler added: “My advice would be to establish what your family values are because, at the end of the day, even in the conflicts and disagreements the values that you hold override conflicts and help you to find a resolution.

“In our case it’s been the single biggest thing that has made a difference to finding a resolution, as we made the transition from one generation to the next. We have family value of inclusiveness, accountability and so on. I would also note that the family dynamic is very different from a regular business.

“Be careful of lawyers and accountants. It’s best to not have them lead the process. That’s one of the biggest downfalls of family enterprises. It’s best for you to be mindful of what the family wants first, and then involve the lawyers and accountants and not have them lead the process.”

Mr Butler said the business environment has been challenging, which has helped to temper the expectations of family members.

“The business environment has been very difficult since the recession of 2007-2008, which has affected us in a tremendous way, but that has helped our family develop realistic expectations,” said Mr Butler.

“The business can’t grow as fast as the family grows. When people know the challenges they are much more willing to accept the terms and conditions.”

Mr Walsh, during his presentation, emphasised the importance of having a family business practitioner to help with complex family matters in the business environment.

“If you need advice on management you are going to go to a management consultant. If you need advice on ownership, whether it is the financing of your ownership or reorganising your share structure, you’re going to go to lawyers and accountants,” Mr Walsh said.

“Yet when you go to the family circle to try and manage them fairly, we go back to those same people. You should really be going to a family business practitioner because these might be some of the most important decisions that you will ever make in your life. I will assure you that the design you make will impact your family, although you may not be around to see the impact of those decisions,” said Mr Walsh.

“There are two parts to the family business, the family part and the technical. Let the family practitioner deal with the family part and then take it to your accountants and lawyers hand to have them frame it legally and financially.”