Matt Sullivan is a new Family Business Advisor at DVFBC. He brings over 45 years of family business experience and is excited to be a part of our Learning Community. This blog is the first in a series from Matt.
It was 1989 my thoughts were short, my hair was long… this line from a Kid Rock song accurately captures my early memories of the Sullivan family business meetings.
These ‘mandatory’ meetings took place as ten of us would squeeze around Mom and Dad’s dining room table. Dad ran the meeting efficiently and with fatherly authority. He had his agenda and most participants (Mom, Joan, Mike, Dan, Gen, Mary, Patti, me, Paul, Vince and Joe) mostly listened, nodded, asked a few questions and occasionally were instructed to sign documents. Candidly, I had little understanding of what he was really talking about a majority of time.
Concepts like ‘per stirpes’, yes stirpes (not stripes), I’m still trying to figure out. Buy-sell agreements, restricted voting shares, shareholder trustees, corporate officers of the business, estate tax planning, etc. were some of the new terms we started to learn.
The only easy to understand topic on the agenda was Planning for Elizabeth. Elizabeth is our youngest sister with Down syndrome. The priority was clear to all. Make sure we had plans, backup plans and the backup to the backup plans on supporting her today and in the future. Elizabeth rarely wanted or needed anyone’s help as she was always self-sufficient and independent. Mom and Dad excelled here as the plans throughout the years to support Elizabeth were exceptional.
I think it is important to note that Dad was really fixated, (maybe more disheartened is more accurate) on one statistic regarding family-owned businesses. He would consistently bring up that 70 percent of the family-owned businesses would fail a successful transition to the second generation and almost 90 percent will fail to make it to a third generation.
Were these numbers accurate? Actually, I’m not sure. What is relevant is Dad was now on a mission to figure out everything in his control to increase the odds of success to his business. Dad searched and read everything he found on the topic. He talked to business owners, family business owners, accountants, lawyers, organizations, and associations to get their guidance.
We started receiving family business magazines and newsletters. He hired a PhD in industrial psychology to meet and interview each of us. He continued our semi-annual family business meetings to review progress, make adjustment and continue to plan for going forward. We ‘worked the plan’ over the years.
Looking back, it is easy to realize how effectively Dad started a process for us to be educated owners and shareholders while prioritizing the family. We started to understand the topics, contributing to the action items, taking responsibility to make the decisions on our own. It was progress, not perfection, as DVFBC likes to appropriately remind us.
By the time the 1990’s rolled around, the business had a functioning board of directors with outside independent advisors, a shareholder compensation policy, family employment guidelines, internship program for next generation, etc. Was everything perfect or easy? Absolutely not. We had plenty of challenges, varying opinions, some disagreements, and the occasional set of tears as with all families.
But we were now working with some structure and good business practices to help increase the odds of success for our family business. It reminds me of that Mark Twain quote about how little my father knew when I was a teenager and how much he learned by the time I turned 21. Looking back, I am incredibly grateful for my father’s far-sighted leadership of our business family.
Today, as a Family Business Advisor I am appreciative for the opportunity to help support other business families as they navigate similar complexities. I am also enjoying the opportunity in “giving back” to help others successfully navigate their 5 Mountains and will look forward to sharing more of our family business stories in future blogs.
Footnote: (Dad) Michael L Sullivan was one of the founding members of Dunmore Corporation. He led the business as president from 1970 to 1988 and then continued serving the business as Senior Business Advisor and Board Member until his passing in 2005.