la FamiliaPosted: June 5, 2014
June 5, 2014
The names flow across our current headlines –
Lewis Katz, the new co-owner of the Philadelphia Inquirer newspaper, dies in a plane crash. Questions quickly arise as to the future of the deal. Will his son replace him on the Board? What will that mean for the sale?
Donald Sterling, engaged in a long fight, finally agrees to the sale of the LA Clippers. But the sale is actually through a family trust, of which his wife is sole trustee. His lawyer claims he has to sign off, but there are reports that his wife claims Sterling is not capable of making the decision to sell. What does that mean for the deal?
Go back in time and you can see how events seemingly affecting only one person can impact an entire organization as well. In competitive intelligence, with organizations and businesses that are dominated by one person, the fate of that person is intimately intertwined with the fate of the organization. But in competitive intelligence, it goes further than that. It goes to the family, in ways not always obvious
Let me give you two examples.
The Supply Chain
The first dealt with a family-owned company. A client was concerned about many changes that this Competitor had instituted and about its improving competitive position. One question was, “Where did the Competitor get its inputs?” Initial research turned up no leads.
So, we went back to what we had already found. As a part of the assignment, we had developed a history of the Competitor. The Competitor was truly family-owned, several generations down from the sibling founders. A close look at the business today showed the presence of children, grand-children, and in-laws of the founding siblings throughout the firm.
What was interesting was that there were several members of the founding family involved with the business at the very beginning. However, after several years, one of the founding siblings left the business. That was an anomaly.
As we’ve said before, when you see an anomaly. Stop, look around, and think. In this case, the question became what happened to this sibling? We determined that he had created a company that processed the raw materials of the same kind that his former company now used. Digging into that company, it soon became clear that the people running the company today were members of the family of its founder, a sibling of the founders of the other company.
That meant we had found the likely supplier. Just as the running of the competitor was kept within “the family”, the supply chain was also run on the same basis.
In another case, we were profiling a rapidly growing, and possibly soon to become public, Competitor threatening the client. There were rumors that the founder would be selling a minority interest in the Competitor, which our client felt would provide the Competitor with substantial funding to come more directly at its market.
However, as is the case in privately held companies, and in some public companies as well, we had already dug into the founder’s background. What we found is that there was a long-running dispute with a former spouse about the division of the marital estate. So? One issue was that the former spouse was claiming that this new rapidly growing business was actually founded with her money and that she was entitled to a piece of it.
This changed the potential consequences of the rumored sale. It meant that, if in fact a minority interest were sold, the former spouse would at least be asserting a claim on it, if not in fact receiving some or all of it to settle a decades-old lawsuit. That, in turn, meant that our client was not going to face a well-funded, rapidly growing Competitor, but probably one which had finally put its own “family” house in order.