There are several issues herer. Preserving his life's work is a major these. Family unity is what suffered most from a lack of agreement and clarity of intent. These should have and could have been handled far in advance for a successful transition.

Joan M. Ridley, CEPA, CBI, CFP®
Once upon a time there was a magnificent king, King Henry II in 12th century England, and his Queen, Eleanor of Aquitaine (that’s in France).  Eleanor was considerably older than Henry, and still very beautiful. Unlike Henry, not much has been written about her but we do have some information in the writings about Henry, her sons, and other men in her life.  We do know that she was a powerful figure, albeit much suppressed as women were in those times.  Henry and Eleanor ruled over a large and very rich empire that extended from the Solway (that’s near the English-Scottish border) to nearly the Mediterranean, and, Ireland.

Henry, a brilliant ruler, established a judicial system, managed and kept his nobles (his key people) productive and in check, raised taxes to manage the kingdom, and established an English military.  He also kept his kingdom intact by fighting off his competitors (it seems like France and England were always at war).  Henry and Eleanor had lots of children - five sons and three daughters. Henry was getting on in years – early 50’s was old then. Henry continued to protect the kingdom and to extend it so that there would be something to leave to all of his sons.   

Today we would say that his strategic plan was to grow his enterprise by acquisition. He was very healthy at the time and active on the battlefield. True, he didn’t fight twelve months out of the year because in those days, battles were fought when the weather was nice in the spring, summer and fall, but not in the winter due to inclement weather.   King Henry fought with a heavy sword and armor atop his mount– no easy feat for the aging king.  He was truly a powerful and remarkable man. But life in the kingdom wasn’t perfect. His run-ins with the church are well-known including his misunderstood order to his nobles to do away with his once very close friend and Archbishop of Canterbury, Thomas `a Becket.  Henry fell out of favor with the Pope for his unintentional role in the massacre of the Archbishop. The King’s long time marriage to the powerful and outspoken Eleanor was most likely not a peaceful one which created and furthered their family dysfunction.   His extra-marital activities didn’t help matters either.  On top of all that, Henry stressed a great deal about who he would name as his successor to rule his vast kingdom when he died.  He wanted one son to rule the entire kingdom.  That’s a tall order.      

Like every ruler or entrepreneur in his later years, succession was always on Henry’s mind.   He wanted their son John to succeed him as King, while, headstrong Eleanor was determined that Richard would be the next king.  As the story goes, they fought continually about this while their three sons, Richard (the oldest), John (the youngest), and Geoffrey (the middle son) fought for power.  The truth is, neither John nor Richard were fit to rule.  Richard, known today as Richard the Lionhearted, like King Henry, was an accomplished warrior and strategic commander.  But he had spent nearly his entire life in his mother’s beloved France and very little time in England, so he might not have had a relationship with the English nobles.  While John seemed to have some administrative abilities, he was totally cruel, greedy and not very concerned about the welfare of their subjects.  Nor did he accept or value input from the nobles.  So neither Richard nor John were groomed to be an effective leader of the kingdom.  Eleanor encouraged her sons to take up arms against Henry to overthrow him so he imprisoned her in a castle, much like what we call “house arrest” today.  Upon Henry’s death, Richard, the eldest living son became king.  But the story doesn’t end there.

Richard was a dutiful son who kept his father’s unfulfilled promise to lead the third crusade to the Holy Land to expatiate Henry’s role in the murder of Becket.  John ruled in King Richard’s absence while Richard was busy crusading in the Holy Land. The crusade was not successful and Richard was captured and imprisoned by the King of Austria on his way back to England. John, who was good at raising money, was forced to levy more taxes to pay his brother’s ransom. John was not pleased with the prospect of Richard’s return but he reluctantly parted with the cash, once raised, in order to free his brother. Fortunately, the very capable nobles managed to keep John somewhat in check during Richard’s absence.  Richard did return to run the kingdom but died a few years later. England went through some difficult times both during and after Richard’s reign, including a civil war.  John became King upon Richard’s death. He was cruel and not very well liked.  He managed to lose Normandy and much of the vast Angevin empire in France. His nobles found him impossible to work with. They forced King John to sign the Magna Carta which greatly curtailed the king’s power.  Upon John’s death, his son, Henry, became King Henry III.  By now the government was weak, significant holdings had been lost, and the country was involved in fruitless, costly wars.  By the way, Eleanor was released from prison, lived to a ripe old age and had the misfortune to witness the mess that she and her husband had created.

So King Henry II was very much like some business owners of today.  Although a very able ruler, like most business owners, he failed to create a well-thought-out and well-executed succession plan. If he could speak from the grave, I wonder what advice he would give to business owners to insure a smooth, successful business succession, and improved family and community relations.  Here’s what he might say:

  1. Seek professional counseling if you and your spouse are not in-synch about family succession issues. If you and your spouse lack solid conflict resolution skills, find someone who specializes in families in business together.
  2. Call in a professional to do an assessment of your kids’ natural abilities. How well do they work together? How well they will work with your non-family key people?
  3. Be clear about the difference between ownership transition and operations transition when you depart, either voluntarily or involuntarily.  One addresses ownership transition and the other, operations. They are not the same.  When a strong leader/owner departs, it leaves a tremendous power vacuum for those left behind. They usually fight with each other about who will run the company, and how. Sometimes this pulls the company apart and destroys it. Both a well-drafted emergency operating plan, and a buy-sell agreement are necessary to avoid this situation.
  4. Be realistic and accept your offspring’s’ native skill sets and their individual ability to lead, manage, or to be a worker-bee.
  5. Start grooming your kids early.  If they aren’t qualified to fulfill a role in the company, gently suggest that they find employment elsewhere.  Do it lovingly and with great care. Start working with the family business advisor first before you do this in order to reduce the strain on family relations. This is a delicate area. It needs to be approached gracefully and with much forethought.
  6. Develop a solid team of key people who work well with each other, with your children in the business, and with new ownership. As soon as you determine that a key person is critical to your business, enter into a well-drafted and properly funded employment agreement, one that clearly spells out the role both under your lead and the next owner’s.
  7. Make an honest assessment of your company’s value drivers and how well they perform compared to the competition. And remember, anything that is not documented does not exist. Information that is stored in your head is invisible to others, subject to interpretation, and of no value without you. Information that is stored in your head could actually result in misunderstandings among your family, key people, and advisors. Write it down. Keep it current. Share it with all whom it affects. Well-performing value drivers insure that the company will survive and thrive when you are gone.
  8. Make an honest assessment of your advisors.  Make changes now where needed.
  9. Don’t set your kids up for failure and lost family love.
  10. Always remember that family comes first. Damaged family relationships can rarely be healed.

To learn more about this tale, watch the very entertaining 1968 Academy Award winning movie classic “The Lion in Winter”.  It is set in 12th century England during Christmastime, so it qualifies as holiday viewing. It stars: Peter O’Toole, Katharine Hepburn, Anthony Hopkins, and Timothy Dalton. Although fictionalized, it is to a great extent factually accurate and offers much food for thought for today’s business owner. In one opening scene, King Henry has let Queen Eleanor out of prison to enjoy Christmas with the family (he kept her locked up for 10 years until he died). Henry has gathered the family to talk about succession.  She is magnificent and looking very regal in her open boat as it glides up the river. She is visibly thrilled to be allowed out of prison at Salisbury Castle to attend Christmas Court at Chinon. Hepburn’s Eleanor delivers one of the best lines of the movie “what family doesn’t have its ups and downs?” Truer words were never spoken.   

Copyright 2015 Joan M. Ridley

Joan M. Ridley (CEPA, CBI, CFP™) is an author, speaker and President of Business Wealth Solutions, LLC. She leads design and implementation of strategies to help business owners exceed their goals before and after retirement. She has more than 30 years of experience advising business owners and managing their business and non-business wealth.