A Mediator’s Role In Successful
Family-Owned Business Transitions:
A Case Study
Both families and businesses can find transitions
difficult. Combine family and business – as in fam-
ily-owned businesses – and the difficulties grow
exponentially. The network of family relationships
(the family system) invariably brings conflict that
can jeopardize the survival of family-owned busi-
nesses into the next and succeeding generations.
Mediators trained and experienced in the complexity
of advising family businesses can play a crucial role
in helping those businesses avoid the outcome so
aptly expressed in the adage “Shirtsleeves to shirt-
sleeves in three generations.”
We will illustrate the role of neutrals in helping
navigate three typical types of transitions that fam-
ily-owned businesses face: transitions in leadership,
governance and ownership, using as a case study a
hypothetical family-owned business, Simpson Gar-
den Supply.
SIMPSON GARDEN SUPPLY, INC.
Simpson Garden Supply Inc. (“SGS”), was formed in
1980 by Bob Simpson (now aged 62) and his brother
Bill (65) as a garden supply and landscaping business
in White Plains, NY. SGS is a New York corporation,
with 15 full time and 10 part time employees
When organizing SGS, Bob and Bill allocated themselves 40% each of the 100 shares and 20% was
sold for $50,000 to their sister, Hope (64), and her
husband, Larry (70). Over the years SGS became primarily a wholesaler to small retail garden centers and
a landscape contractor for large commercial and public
projects. There are a few large competitors, including Jones Landscape Supply, Inc. (“JLS”), of Albany,
but SGS has the advantage of being geographically
closer to the customer base in Westchester County,
NY and Fairfield County, CT. Six months ago JLS made
overtures to Bill to acquire SGS, but he and Bob have
declined to consider selling.
Bob focuses on business planning and sales and
Bill takes care of plant stock, inventory, equipment,
and supervising the outside staff. Bob’s wife Bar-
bara (58), handles the financials, runs the office
and supervises the retail operation. Two non-family
members are also key employees: Jeff Hackett (40),
is Vice President-Sales and Sam Winslow (38) is Vice
President – Operations. Both have been with SGS
for over 10 years and are considered almost indis-
pensable. A few days ago, Bob and Bill became aware
that both Jeff and Sam have been approached by a
local investor to set up a new business to compete
with SGS which would pay them 30% more and give
them each 20% of the shares.
Bob and Barbara have two children, Katie ( 25), a
college graduate with a degree in business, currently working for a department store in New York
City, and Carl (30), a rock musician. Katie recently
married Bruce (29), who dropped out of college to
manage his family’s organic vegetable farm in Ridgefield, Connecticut (approximately 45 minutes from
White Plains), after his father’s stroke. The farm supplies high-end restaurants and specialty markets in
the New York City area. Carl recently married Chelsea ( 24), a land use planner who is CEO of Green
New England, a well-funded grass roots organization
working on projects to make the Northeast more
environmentally sustainable.
Bill and his wife, Kathy, have two children, Stephen
(28), who teaches at Columbia University, and Dolores ( 17), who has had difficult teenage years and is
currently attending a therapeutic private school in
Massachusetts. She has a high IQ and is said by her
math teacher to be a computer genius.
In 2014, SGS gross receipts were $6,000,000, net
profits were $800,000, distributed pro rata to shareholders –Bob and Bill receiving $320,000 each,
Hope and Larry $160,000. SGS pays salaries to Bob
and Bill ( $200,000 each) and Barbara ($75,000).
After a late night conversation last month, Bob and
Bill acknowledged that they needed to think about
eventual retirement. Bob insisted that his children
Katie and Bruce should take over when he retires.
Bill said that his children Stephen and Dolores should
definitely have leadership roles in the next generation. Although Bob and Bill expect to continue to
work for the next few years, they agreed to start
thinking seriously about transitioning the business
to the next generation, with the understanding that
they both wanted to have retirement annual incomes
About the Author
WARREN
BAKER, J.D.
is a full-time mediator, group facilitator
and family business
advisor located in
Chicago, with a
national practice,
The Family Business Fulcrum. He
co-chairs ACR’s
Commercial Section.
He can be reached
at 312-848-1350
or WBaker@TheFBF.
com.
by
Warren Baker,
Richard Lutringer
& Matthew L. Caras