How do you deal with sudden loss in the family business?

Business Leader Post, May 30, 2014

Thomas D. Davidow, Ed.D.

I have talked a lot about loss in this column. In discussing the issue and its impact on the family and the business, I have focused on the importance of addressing the emotional aspects of loss; but taking appropriate and effective actions on the business side can be crucial as well.

I was talking with a banker today who told me about a family business in which the father had begun the process of stepping back. There are two different operating companies in the business. One of the companies was being run by the son, and the other company was being run by his daughter.  This is the situation that the banker presented: 

The son recently died from a drug overdose, and his body was discovered by his sister. The father had been on a kidney transplant list, but unfortunately his name did not come up so he passed away 24 days after his son. The mother/wife got on a plane and flew to Florida. There is an aunt (the deceased father’s sister) who handled a lot of the administrative parts of the business.

As soon as the banker heard about the tragedy, she set up a meeting with the daughter. Although the company has a line of credit with her bank, the daughter is not listed on the loan and is therefore not aware of the loan.

The situation is overwhelming. Where does one begin? It was agreed that the first step was to call the mother (who is an owner and listed on the loan) to get permission to share the existence of the loan. The loan is not an in issue. However, if the banker is going to be helpful as a trusted advisor, she can’t be in a position of withholding information.  The second step is to insure that the aunt is present at the meeting. The aunt will have lots of business information and knowledge of the professionals who have worked with the father over the years. She can also be an additional support to the daughter.

The aunt has described the daughter as being in an angry state--of course.  She has been abandoned by her brother, her father and her mother. The focus of the meeting, however, should not be on the emotional issues but on gathering the facts: Who has the estate plan? Is there insurance? etc.  I suggested that the meeting have two components--emotions and facts. The banker can decide what comes first--the emotions, the facts or some combination thereof-- but the facts have to prevail. They need to create action steps necessary to get a complete picture of the situation. The banker can set up a series of bi-monthly business meetings for a few months to review the action steps and ensure that the business of the business is being addressed.

Sudden loss can create feelings of helplessness and loss of control. Creating structures, action steps and activity  not only ensures the necessary ongoing management of the business (life does go on); it also can give the grieving sister an opportunity to take the first steps towards getting some control back into her life. And it can provide a necessary distraction from the overwhelming feelings of grief and loss.

The banker's last question was "What about the mother?"  My answer was that as laymen, we could ask, “How could she leave, go to Florida and abandon her daughter?” We can discuss how unbelievably insensitive the mother is, etc.  However, as professionals, we have to refrain from judgment and interpret the mother's behavior as a response to being overwhelmed with grief.  Attend to the business first. There will be lots of time to grieve.