Royal Agriculrural College, Cirencester 3 March 2009 STEP Gloucester and Wiltshire Branch Families at War – mediating trust, estate and family business disputes Ian Marsh TEP familydr Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 A question (or 3) for you How do you deal with conflict in your family business? How well does that work for all concerned? Would everyone else concerned agree with your first two answers? Royal Agriculrural College, Cirencester 3 March 2009

Conflict is inevitable … I am in conflict if I believe that you and I have incompatible goals and that your actions will interfere with me achieving mine – and I cannot just accept that. Royal Agriculrural College, Cirencester 3 March 2009

The risk of destructive conflict (UK - 2006) 2 out of 5 marriages end in divorce 1 in 4 families fall out over a will 42% of siblings never talk again 20% never talk to their mother again 11% make a will to block inheritance Only 30% of family businesses make it to the second generation, and only 13% to the third Royal Agriculrural College, Cirencester 3 March 2009

The cost of destructive conflict For the family Loss of health, family and fortune For the trustee Loss of trust and opportunity Reputational risk For the adviser Loss of clients Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 Sources of tension Sibling rivalry Generation gap/digital divide Workers v investors Bloodline v in-laws First family v second family Family v professional management The vision thing Royal Agriculrural College, Cirencester 3 March 2009

Nothing is ever about what it’s about Relationships How do I want to be treated by others? Saving face Who am I – and how can I preserve that? Process How will we communicate and make decisions? Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 An anatomy of conflict Perceived threat Failed communication Building alliances Going critical Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 The big bang Any change – or threatened or rumoured changed, eg: Death Separation/divorce Managerial succession Ownership succession Proposed sale of the family business Restructurings and reorganisations Uncertainty, eg global financial crises Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 “Many people fantasise secretly about revenge. Few carry it out. Most hire lawyers instead.” Kenneth Cloke, Mediating Dangerously Royal Agriculrural College, Cirencester 3 March 2009

How could you do it better? What do you want to achieve – and why? Can you do it without the other person? If not, what do you need them to do? What do you need to say or do, for them to do that? Put yourself in their shoes Why would they say no? What must you do to change their minds? Get help Even something as simple as estate planning … If want wealth to pass down and they will fight you can’t do it without them!! Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 Some golden rules Take responsibility for the problem If you don’t “they” control your destiny Assume nothing Assumptions are dangerous – and usually wrong Be curious You can’t change somebody’s mind if you don’t know what’s in it Listen You have twice as many ears as mouths for a reason! Royal Agriculrural College, Cirencester 3 March 2009

The role of good governance Agree now how to resolve future differences Conflict diagnosis/audit Designing an effective process Getting people to buy into it Getting people to use it Using it : training , coaching, administration, funding Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 And if all else fails? Park the tanks on the lawn if you have to But don’t abandon diplomacy And remember – 30% of no-lose cases do lose Judges can’t sign peace treaties Royal Agriculrural College, Cirencester 3 March 2009

How one family say they deal with conflict “Fortunately it never happens” “We’re very democratic - I have 51%” “I’m a great believer in consensus” “We talk a lot, and then Dad does what he wants” What people say in family meeting and in private is sometimes very different! NB myths and legends exp re intractable disputes Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 Back to you … How do you deal with conflict in your family business? How well does that work for all concerned? Would everyone else involved agree with your first two answers? Royal Agriculrural College, Cirencester 3 March 2009

Royal Agriculrural College, Cirencester 3 March 2009 Contact Ian Marsh at familydr Central Court 25 Southampton Buildings London WC2A 1AL tel: +44 (0)20 7083 7027 fax: +44 (0)20 7083 7028 e-mail: imarsh@familydr.co.uk Royal Agriculrural College, Cirencester 3 March 2009