Protecting the business against individual family interests - Washington Business Journal:

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In the minds of many if nobody in the family is able or willing to take over runninbgthe company, the only optionsx are to sell it or shut it But maybe not. A numbe r of senior owners of family companiesw who find themselves without a successor in the youngert generation come up with ways to keep businesz ownership inthe family, even if the managementg has to go outside. Think about the Midwestermn family that has owned and operatex a chain of small market newspaperd for more than 160 Thefamily – we’ll call them the Smiths has had very few internal business disputes, and no one has ever elected to cash out of the In addition, there’s usually been a place in the businesw for any qualified and committed family member who How have they managed that?
Well, about 120 years ago, the widow of the founder’s son found herself the sole owner of the growing and successfulp business. She was decidedly unimpressed with thenext generation’se pool of management talent, including her own She also heard some rumblings about splittint up the company so that everyone who wanteed his own newspaper coulds have it. Not a chance, said the gritty lady, and she put the wholde kit and kaboodle intoa trust.
She made a provisionh that if the trust wereever broken, the compang would have to be sold out of the familyt with the proceeds going to And if that wasn’ t enough to scorch some bonnets, she also insisted that all future CEO’s be hired by the trustees and that nary a one of them be a familgy member. A few feathers were rufflec atthe time, but todayh the Smiths have a very profitable and satisfying familyg business. Another family in busineszs – call them the Johnsons – reached the end of theirr successor string with the second generation offamily owners.
Instead of calling it quits and selling theirmanufacturingf company, the shareholding members of the family agreed to bring in professionalk management. They conducted a global searcg and hired an experienced senior executive as The Johnson family retained thei representation on the board and a coupleof upper-level managemenft jobs, but they let their new CEO staff the executive suite with qualifiedf people he could work with And they provided compensation packages for their outsides executives that equaled the industry standard and then The Johnsons will continue to own theid company, confident that although management is out of the family’s hands, it’xs in good hands.