Soriano: The generational impact of a family in conflict

·3 min read

BARCELONA, SPAIN. A major conflict and a fallout among family members/shareholders mostly belonging to the second and third generation, can be devastating for all parties but for the children, it can be severe. The warring siblings have to deal with legalities and emotions, and their children have to reconstruct their world now that their parents, uncles and aunts are no longer in speaking terms. The anger, frustration and pain experienced by these conflicted shareholders with the same DNA can often become seemingly insurmountable and all-consuming. When there is too much distress, it is the family, the children, the business and the employees that suffer the most.

When there is legal action for or against any family branch, the world of these children belonging to the next generation, will dramatically change overnight. The parents/shareholders are transformed from the (generally) loving and caring unified front into weeping, erratic and hostile people who have no energy or ability to focus on the needs of their family beyond basic daily routines. Each side’s obsession is to pursue ownership of the business that was started by their parents at all cost as they claim their right to ownership. But should it be stewardship instead?

Let us take the case of the very public Yanson family conflict in the Philippines, owners and operators of Ceres Liner, the biggest bus company in the country. It started with “trust issues” levied against the other group and it brought into the open what was suspected ever since the founder Ricardo Yanson Sr.’s death in 2015: that the battle for control of the spoils that afflicts most Asian families, when a powerful patriarch passes away, had visited itself on the country’s most admired transportation company.

What may have started as petty misunderstandings among siblings during childhood turned into a volatile brew. Eventually, the conflict turned into a hostile corporate takeover by one group comprising four siblings. This brought into the open the messier underpinnings to the conflict and offered a revealing glimpse into a longstanding and successful family business that has been haunted by internal squabbles. I cannot imagine how the next generation cousins are taking this conflict. It must be taking a tremendous toll on their mental and physical health.

Root cause

What really caused the meltdown? A generational transition is a critical point in the life cycle of a family business. Founders believe they have a foolproof succession plan in place, but problems arise when he or she dies and carelessly passes the torch to a successor that may not necessarily be acceptable to the rest of the family. As the business transitions from first generation (owner-managed) to that of sibling partnership (second generation), careful collaboration is needed to accommodate the diverging needs of the surviving spouse and the adult children.

From my perspective as a family business advisor looking from the outside in, it was very clear that sibling rivalry, ego, jealousy, money and emotions were among the reasons why the conflict erupted. I am certain that the squabble reached boiling point due to the family’s poor handling of the events leading to the power struggle.

Sadly, when these adult siblings take their issues into the legal forum, with its inherent delays, high costs and frustrations, irreparable damage to the family may be caused. When families turn to lawyers and the courts, it is very difficult to restore trust.

To borrow a quote from Tan Sri Long Poh Kon, a third generation successor of Royal Selangor Group, a 130-year-old family enterprise based in Malaysia, “My father told me to beware of family feuds. If you have family members contesting over the pot, then nobody looks after enlarging the pot. We are merely stewards of the family wealth, which is to be enjoyed over successive generations.”

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