How to leave a family business

Working in a family firm can be complicated – and resigning even more so. Is there ever a ‘good’ way to strike out on your own, away from your kin?

Jordan Baker was once destined to become the head of his family’s technology logistics business. He started out at Essex-based 21st Century Transport at the age of 12, sweeping floors and answering the phone. “I always intended to work in the business and was in line to run it when my dad, Tony, retired,” he says. But in 2008, at the age of 20, Baker decided to leave the company. “It’s difficult when your dad isn’t only your dad, but your boss too,” he says. “You might upset your dad on a personal issue but then there can be repercussions in the professional environment too. It can be an uncomfortable dynamic.”

Families can be complicated – and when you work with family, even more so. The highs and lows of family businesses have been chronicled in TV shows from Succession to The Sopranos. At best, family firms can achieve smooth transitions, expansion and preservation of the ideals underpinning the endeavour, like Hoshi Ryokan in western Japan, an inn run by the same family for 46 generations.

Retail giant Walmart may not be without its problems but it’s still around 50% owned by the descendants of founder Sam Walton; family disputes, if they crop up, rarely make it into the news. Yet there are numerous high-profile examples where relationships have gone wrong, from the family schism that famously resulted in the creation of two of sportswear’s most iconic brands, Puma and Adidas, to the Samsung family feud and succession woes, and the legal battle pitting Australian mining billionaire Gina Rinehart against her family members.

Recently, the decision by Prince Harry and Meghan Markle to step back from the British royal family – sometimes dubbed The Firm – has made countless headlines. But while the details and dynamics of their departure might be more eye-catching than most, quitting a family-run institution to forge your own path is nothing new. Leaving the familial fold can be hard, however, because of structural issues and emotional dynamics than can be unique to these environments. So what drives people from them, and is there ever a ‘good’ way to leave?

 ‘Tensions and rivalry’

Family businesses make up around two-thirds of global companies. And while there might be countless advantages to working with those you know best,Jennifer M Pendergast, professor of innovation and entrepreneurship at Northwestern University in Chicago, says family companies must negotiate unique stress points. “There is a tendency for everyone to know your business. If you have an argument, likely the rest of the family in the room knows about it, and may choose to take sides. Imagine if you had to go home and find your boss seated at the dinner table.”

Working with relations can generate much higher levels of trust and commitment, accounting firm PricewaterhouseCoopers wrote in its 2014 family business survey. But it “can also lead to tensions, festering resentments and open conflict, as the individuals concerned struggle to keep ‘head’ and ‘heart’ separate, and make a success of both their work and family lives”.

Family businesses make up around two-thirds of global companies

In Australia, where 70% of businesses are family-owned, accounting firm KPMG found in a survey that the most common sources of conflict were: communication style, future vision and strategy, and balancing the needs of the family versus the needs of the business. Perceptions of problem areas differed between the generations; 21.8% of future family-firm leaders said communication style was the leading cause of conflict, for example, compared to just 13.3% of current leaders.

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Inter-generational issues can have other impacts, such as perpetuating family stereotypes. “It’s tough to live down who you were as a child and it’s tough to get past mistakes that people will always remember… Siblings are often compared to each other, whilst cousins or more distant relatives aren’t: ‘He is the ‘smart’ brother’, ‘She is the ‘entrepreneurial sibling’,” Pendergast explains.

Jeremy Waud spent 20 years working for English facilities management giant OCS Group, which was started by his great-grandfather Frederick Goodliffe, before deciding to leave and launch a rival enterprise. “I’d basically had enough. I was the managing director of the facilities management side of the business and there was going to be some restructuring. It didn’t look like the parts I was responsible for fitted into the future vision, so I decided it was time to get out,” he says.

Global sportswear brands Adidas and Puma were created by competing German brothers who both left their family’s once-unified shoe business (Credit: Alamy)

Waud, 58, says that the sheer number of family members involved meant tensions were often bubbling under the surface. “At one point there were 15 family members working in the business; uncles, cousins, brothers… you get big family tensions and great rivalry across different factions of the family. And there’s the politics of shareholding and where the power lies,” he explains.

When he left in 2000 to launch his own business, a facilities management company called Incentive FM, unhappy family members took him to court, concerned he would poach clients. Establishing his own company involved several years of very hard work. “At first, I thought starting again would be easy, but then I realised lenders aren’t as keen with no assets behind you. We were able to borrow a small amount from the bank, and the business started trading in 2002. We had to start from scratch and slowly build it up.”

You get big family tensions and great rivalry across different factions of the family – Jeremy Waud

Waud’s experience isn’t surprising, according to Pendergast. When a family member leaves the business, feelings can run high. “Family members may take it more personally if a member leaves because they could view it as a value judgement on the family enterprise,” she says.

Why transparency matters

For Mauro Bruni, 35, leaving his family company took several years. The plan had always been for him to take over at his father’s heating and plumbing business, Bruni & Campisi, in Bedford, New York. He worked in marketing and graphic design at the company for 12 years – but he also had another passion, ice skating. For many years he combined the two roles, combining remote working with performing around the world as part of ice dance show Holiday on Ice.

They do everything on a handshake and promises. Then when things go wrong – Karen Holden

Bruni finally cut the cord in 2019 after setting up a professional ice skating and events company, House of Mauro. “My father always knew my first love was skating, and when I ended my employment with him, he was very supportive and helped me set up my new company,” he says. Fortunately, his brother was willing to take on the family firm. “He’s stepped up to the plate in the last few years, taking on more responsibilities to the point where he’s ready to step into my father’s role,” Bruni explains.

Bruni’s exit was relatively smooth, but some family businesses can find they have no plan to deal with the departure of a key member, says Kate Cooper, head of research, policy and standards at the UK-based Institute of Leadership & Management, a professional body representing around 30,000 leaders. “Businesses need to be on top of their risk management; they need to plan for the unexpected or unforeseen to make sure there’s backup,” she says.

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Legal issues can also trip people up on the way out of the door. Karen Holden, CEO of London-based A City Law Firm, says that key formalities can be overlooked in family businesses because the assumption is that trust exists, making legalese feel awkward. “Not many people think about the (legal) paperwork when they’re all very happy. They do everything on a handshake and promises. Then when things go wrong, there isn’t the legal documentation to prove what was agreed.”

Jennifer Pendergast says that negotiating your exit carefully is the best way to avoid friction. “The best way to leave is to be transparent about reasons for departure – but this needs to be done in a considerate and professional way, for example: ‘I’m choosing to pursue a different path that’s a better fit with my interests’. It’s also helpful to acknowledge and appreciate the opportunity offered to be part of the family enterprise.” Pendergast adds that away from emotions, it’s good in practical terms to manage a departure well. “It’s always a good career situation to avoid burning bridges, but in family business, even more so because you’ll be involved with the stakeholders for the rest of your life.”

Walmart, the US-based retail chain that’s also one of the world’s biggest, has been run by the Walton family for decades (Credit: Alamy)

‘King of my castle’

Of course, not every decision to leave a family firm is irrevocable. Take the ongoing saga of the Murdochs. Rupert Murdoch’s son, Lachlan, left to set up on his own in 2006, only to be welcomed back to the fold a decade on. And in Glasgow, Scotland, Deborah Ekins has made a partial return to her family’s swimming pool design business.

“The best way I can describe leaving a family business is that it’s like breaking up with someone. You know something’s not quite right, but you still love them and want the best for them,” says Ekins, 29. “I left after five years because I didn’t think I’d be able to run the business in the way I wanted and make it something of my own.” She describes the decision to leave as emotional, but says she hasn’t entirely severed business ties. “I’m now a freelance online content creator and the family business is one of my clients. But they don’t get preferential treatment, they’re always first to be billed,” she says. “I did love working with my family, but I feel much happier following my own path.”

As for Waud, the tough years building his own enterprise were worth it; his business now turns over tens of millions of pounds a year and he has no regrets. “The struggle was well worth it, and the sore feelings pass,” he reflects.

Jordan Baker says his father was initially extremely disappointed with his decision to leave the family firm but came around in the end and was ultimately supportive. He now runs his own marketing agency in London and values his independence highly. “A family business can have an entity of its own, like a family member in its own right. I wanted to be the king of my own castle,” he says.

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