In the beginning, it was all about the founders’ quest for anonymity, to keep the family under the radar and the family business link private. The family office went by an unrelated name shedding zero clues of the relationship with the family and the company employees were made to understand discretion was paramount as regards who or which branch of the family they served. The vaguely worded website raised more questions than it answered. The advisors built a structure that concealed the beneficial ownership as much as legally possible. The staff was continuously encouraged to take pride in confidentiality and it was ingrained in them that bragging, gossiping or loose talk only attracted negative business consequences.
You, as the closest advisor to the family, may have even gone the extra mile to hire technology specialists to erase or encrypt the families’ digital footprint and eliminate, as much as possible, political backlashes, risk of extortion, blackmail and other dangers resulting from family, power, and wealth. You knew that the more the family was in the public eye, the more exposure it would receive, and the higher the odds that some sorry, sordid saga would play out.
And then, one day “Joe Junior,” the potential successor to the family empire, walks into your office and casually informs that he intends to write a book about the family, its businesses, ownerships, dealings and the challenges of growing up in such a family. He wants to divulge the various family power dynamics and conflicts. He wants to spill the beans, wants to make the book a juicy read and seriously considers this his legacy and a service to society. He also hopes that no one in the family will take it personally.
Joe Junior suggests that embellishing some conflicts, exaggerating the wealth count and maybe even the families’ clout etc., is all part of the recipe to churning out a best-seller. Joe Junior continues to explain, that this is his way to let his “creativity” out. Although he has never written an email longer than a paragraph, he confides in you that he always wanted to be a writer and what better topic to write about than the “dirty secrets of the family.”
As the family consigliere, confidant and advisor for decades, you realize that your biggest nightmare has just come true – from within the trenches! Lightning bolts are bursting in your head and down your spine as a million implications race through your mind.
For example, you obviously know that Joe Junior is married to the chairperson of a major conservative bank, which is publicly traded and the substantial beneficial ownership is still held by various family members. You pale merely at the thought of how such “great family stories” might impact the share price and public confidence in the board. Do they really need to know that the chairperson likes to receive advice from “witches and ghosts?” Is it beneficial in any way to wash the dirty linen in the public that she used to have an alcohol addiction? The more implications that run through your head, the more concerned you become of the domino effect. Why couldn’t Joe Junior choose painting or a musical instrument to express his latent creativity!
Joe Junior meanwhile has made himself comfortable on the sofa in the corner of your office, and you are still searching for your first words in response. Sensing your shock, Joe Junior tries to lighten things up with an emotional touch. He says it is not his fault that his family is wealthy or famous. He wants fame on his own terms, and the book seems to be a golden ticket. Sensing your discomfort, he says he knows that as the family advisor, you will advise against it. But then in the same breath he lets you know that he still plans to go ahead!
Although the names and the facts have all been modified, the above scenario is based on a true story. Many family business advisors and practitioners will vouch for this to be common, current, and true.
For family advisors, it’s akin to a bomb being placed on one’s desk and you have seconds to defuse it. If you haven’t done it before, learning on the job may not be an option, given the race against time. It has many potential reputational, financial, legal and even regulatory consequences. Some of the costs are not even apparent at the time, such as the consequences of a class action law suit against a product sold by one of the family businesses. All someone needed was a chapter of Joe Junior’s book, discussing reckless behavior in the personal life of one of the board members, to add fuel to a very expensive fire. Imagine if you were the trusted advisor in such an electrifying situation. What would be your modus operandi?
It may be clichéd, but how about “if you can’t fight them, join them,” as the right strategy in this scenario?
The best way to mitigate some of the potential damage could be by being involved, supervising the content and still assuring Joe Junior that his personal goals will not be short-circuited.
Based on my experiences, as well as discussions with fellow family business practitioners, here are some recommendations:
- Get other family members involved.
Since the book is about the family, suggest to Joe Junior, that he have other family members involved to cover different family views. Such a move allows the family advisor to approach “sensitive” family members and reduce the surprise of the book’s publication behind their backs. This would also help with the accuracy and flow of information, and the ability of other family members to comment, argue and try to correct material before publication. Even if Joe Junior insists on publishing his version, at least the family will be aware of the live wires prior to the publication and will have had adequate time to structure a measured response immediately post-publication.
- Hire a writer.
There are professional “shadow” writers out there with exactly the right experience and expertise to deal with a budding Joe Junior. You should choose professional writers, review their resumes, read some of their projects and make sure they aren’t sensationalists themselves. Some shadow writers do not even demand writing credit and are willing to remain truly in the shadows. Make sure that your ghost writer is bound by confidentiality, define what/if any IP rights the writer retains, supervise personally the content, and ensure nothing goes to the press without your written consent. When you find such a writer, convince Joe Junior that it would be beneficial to have a professional writer involved in writing the book.
- Write a Business Book.
If it’s inevitable that the family will be put under the torchlight, use the opportunity for positive exposure and PR which strengthens the business values of the family. Maybe, convince Joe Junior to write a business management oriented book. A business book describing the family management style could actually have a positive effect on the family business. For example, if the family has a “tough” and “difficult to work with” reputation, use the book as a platform to show a different side of it. Discuss the various philanthropic projects that the family undertakes, provide family stories that counter the “tough” side, and expose the care and sensitivity within the family.
- Turn it into “lemonade.”
Another approach may be to convince Joe Junior to use this book opportunity to help define the family legacy and bring the family closer together. The threat of unauthorized publication may force warring family members to get involved. Such involvement would bring the family under one roof to articulate its legacy and strategy, which could also be a great blueprint in drafting a family constitution. The threat of exposure could also be a good incentive to clean up any lingering mess.
- Have a litigator review the writing.
Quotes in the book could be taken out of context and used against the family. Therefore, have a litigator, better still a former regulator, review the draft. He could then analyze the contents with a view towards whether the text may expose the family to regulatory problems. Are there any confidential materials being published? Is the writing inconsistent with a position that the family has taken politically? Tax wise? Any potential lawsuits that could come up, in connection with the writing? The best case scenario would be to eliminate any problematic information from the book, but if such a result is not attainable, the live wires will be exposed in advance giving an adequate head start in planning how to defuse them.
Not every situation is the same, but when the challenge in the family is from within, sometimes families act incredibly irrationally. Also transparency is one thing but the quest for privacy should also not be a taboo. As family business advisors, we should always be alert to internally generated shocks and help channel wild aspirations in a more guided manner.
About the contributor
Iris Leibowitz is an attorney and management consultant in Israel. She can be reached at firstname.lastname@example.org.