Turf wars and machiavellian siblings often make for compelling corporate drama on screen, think HBO’s Succession or Ridley Scott’s House of Gucci.

These slickly produced stories where sins of greed and wrath are wrapped in blood lines and cashmere baseball caps have captivated audiences for centuries, just swap out the cap for a crown and look to King Lear or Oedipus Rex.

But battles over a family business are not confined to fiction. The dynasties of Ireland have long taken their kitchen table arguments to the pews of the Four Courts. With legacy, money and lifelong relationships and tensions at stake, feuds can turn litigious and expensive.

The O’Gorman family behind the Kilkenny Group, ended up in a two-year-long High Court scrum after Greg O’Gorman was fired from his position as marketing director by his mother, Marian O’Gorman, in 2016. 

He sued for unfair dismissal and for breach of an allleged agreement that would have given him 25 per cent of the group’s €30 million retail business. 

The case ended in a negotiated settlement, “to the satisfaction of all parties”, but Greg O’Gorman has since said the family relationships hadn’t recovered.

The O’Gormans, along with the Wrights, of the seafood group and the Doyle hoteliers, have all had their dirty linen aired publicly, as struggles for money and control fail to be resolved within the household. 

Recognising that family enterprises are distinct from other businesses, even from their founding stages, is essential to their success, Paul Keogh, the family business advisor, told The Currency in this week’s podcast. 

“It’s difficult for some families to talk about dynamics within the family and about potential conflict, because we’re trained as we grow up, to keep whatever is happening within the family private,” he said.

“So we bring that into business too and that’s where the difficulty sometimes arises.”

Almost a million people are employed across 160,000 family-run businesses around Ireland, and they account for roughly 50 per cent of the economy. 

Most family businesses don’t make it to the third generation and only a small percentage survive past the fourth.

Keogh has learnt from his experience that this discontinuation more often than not is because of dysfunction in the family line rather than a dysfunctional business.

“It’s remarkable how people view family businesses as just another business and fail to recognise that they are different, that they have different strengths and different points of weakness,” he said.

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Paul Keogh has long been a fixture of the Irish business community.

For a decade between 2007- 2017, he was known as the gunslinger for property developer Sean Mulryan.

As chief financial officer for Mulryan’s Ballymore Group, Keogh was there when things went south during the financial crisis and he was there to successfully negotiate the group’s exit out of Nama. 

Though the industries he has worked in have varied widely from Guinness to JCB, the common thread throughout his career is a decision to work in family-run businesses. 

“Retail is tough, hospitality is tough and farming is tough.”

Putting decades of experience to use, he now provides bespoke advice for the dynasties of Ireland, counselling them on everything from succession planning, divorce settlements to the creation of a board. 

In Ireland, family businesses are often classed as SMEs; from Keogh’s perspective they are not understood as a specific category of businesses that needs specific support.

“There are nearly a million people employed here and they get very little assistance in creating governance structure, succession planning and helping to advise their children,” he said.

“If you look right across industries, hospitality, retail, services, businesses, farming, the whole economy here is based on family businesses, who generally grow to a certain size, without that much assistance from the state.

“I think the government and banks in Ireland could reposition themselves here and ask; do we really understand this large sector of Irish business?”

“We should be looking at tax reforms for families, and better incentives for family members to join their own family businesses.

“The world has become a global opportunity and some of the family business industries are tough. Retail is tough, hospitality is tough and farming is tough.”

Keogh’s new book, The Family Business Book, aims to guide families through flashpoints and to act preventatively through the lifecycle of a business to avoid disaster.

Tied up in the ownership is not only financial gain but often the legacy of a name and an intergenerational attachment to the land. 

The burden of choosing what will happen after retirement or death can be heavy when there is so much at stake. 

Keogh believes there are ways to avoid acrimony by putting formal structures in place at the founding of the business and by planning for succession over a long period of time. 

“If it is planned properly, a family business has many advantages over non-family ones. If you get it wrong, a badly structured family business can ruin the family or the business or both.”

“Think before you hire” emphasises Keogh. There can be pressure on all sides in a family business, from parents expecting that the next generation will want to succeed them, to children who feel guilt and obligation to take over but no desire. 

“Often I hear business owners saying, ‘how did they end up with all these family members in the business?” as if miraculously they just came in.”

From Keogh’s experience, a lack of clearly defined roles for family members is a tinderbox for potential issues.

“It can be very difficult to run a business properly, if roles are overlapping or not categorised. It’s confusing not only for the family but for employees and customers too,” he said.

At the top of Keogh’s tip sheet is for family members who are interested in working in the company is to leave and work elsewhere for five to ten years, to work their way up in another business totally unconnected with their own family. 

Succession

Succession planning can often be an emotional issue, Keogh believes and the worst way to go about it is to sit everyone involved down on a particular day and make a decision there and then.

“In a non-family business there would be a board of directors, senior management would be approved by the board and the replacement of a chief executive would also be under their remit,“ he said.

Too often the governance structure in a family business is “fairly thin,” said Keogh. 

Keogh recommends putting governance structures in place in family businesses, to avoid grievances.

For non-family employees, taking the time to learn the family, to understand some of their psychology, as well as the businesses, is essential to succeeding in a potentially difficult environment.

“There is no more complex environment to navigate through than a family business, if you’re not somebody with a natural empathy I would think about the decision to join,” Keogh said. 

“Employees need to know if they’re the kind of person that can pick up on signals, on non-verbal communication, if they can be flexible when a business strategy changes overnight or a decision is made at Sunday lunch.”

“You’ll often find in families, when people finish each other’s conversations, people can anticipate what the other family members are going to say and they bring with them into the business. By their nature, family businesses become a reflection of the family itself.”

From his own experience, Keogh advises that employees need to have “empathy as well as special antennae” to succeed in a family business that isn’t their own. 

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Investec is the sponsor of The Currency’s business podcast series. It provides a range of solutions, including specialist FX, Treasury, Corporate Finance and Lending services. To find out more about how Investec can help your business, click here.

Investec Europe Limited trading as Investec Europe is regulated by the Central Bank of Ireland. Investec Private Finance Ireland Limited trading as Investec is regulated by the Central Bank of Ireland.