The longest corporate takeover battle in the history of Switzerland pitted Sika, a domestic chemical manufacturer, against Saint-Gobain, a French conglomerate. The seed of this dispute wasn’t a clash between competitors, but rather the loss of trust between the business’s family owners and its non-family leaders.
Sika was a very successful family-controlled firm from 1910 until the 1990s, when the Burkard family gave up the reins of the company and stepped back from operational leadership. Yet, through their investment vehicle, the Schenker-Winkler Holding (SWH), and under a dual share structure, the family continued to own 16.1% of the capital and controlled 52.4% of the voting rights and had three (out of nine) board seats in the operational entity.
After several years of perceived exclusion from the running of the business at the hands of non-family leaders, majority voting rights enabled the next generation to take matters into their own hands, and in 2014, just one year after their mothers’ death, they signed an agreement to sell the shares to Saint-Gobain at an 80% premium on top of market value.
The announcement that Saint-Gobain had acquired the Burkard family’s shares, thereby becoming the majority shareholder, came as a complete surprise to Sika’s board of directors and management. The resulting takeover battle continued until 2020. But what made a family who had pledged their commitment to the company at the 100th anniversary of its foundation, suddenly decide to sell their shares in secret just a few years later?
The answer is obviously complex and involves many factors. But one factor that stands out is the loss of trust between the family members and the board of directors. It would appear that both sides neglected investing more into nurturing these relationships; to such an extent that it broke down irreparably, leading the family to turn their backs on the business. The Sika case provides other family business leaders with valuable lessons as to how carefully they should navigate the relationship with family owners:
- Non-family leaders must understand the importance of maintaining a healthy dynamic between family owners, board members and management.
- They should be aware of the delicate nature of these relationships and how mishandling can easily cause them to become fraught.
- They should prioritize these relationships, putting significant time and effort into keeping family owners on-side in terms of the direction of the business.
Lesson 1: Maintain a healthy dynamic
Leaders of a family-owned business must maintain the relationship dynamic between family owners, the board, and the management. For non-family leaders, that means ensuring that lines of communication are always open and that family members’ ideas and opinions are treated with respect, in order to nurture a trusting relationship. It also involves confirming that all sides are working toward the same goal. So, there should be clarity on governance, and the roles and responsibilities across the different stakeholder groups.
Of course, it lies with the family owners to provide a clear ownership strategy and family governance, including family employment policies and proactive succession planning. But it’s up to the non-family professionals – the board and the management – to support these policies as part of a strong, supportive business relationship.
Lesson 2: Relationships must be continuously nurtured
The Sika case illustrates the problems that can occur when transitioning from a family-led business to a professionally led enterprise: the relationship between family owners and non-family professionals can easily become fraught.