Third-generation family businesses often separate control from ownership by creating a special class of voting stock that is held only by family leaders, as the Blommers did. While there are nearly two dozen Blommer family members with roughly equal shares of stock, management control is shifting to the third-generation family members who are in executive roles in the business and are empowered by their fathers, Hank and Joe.

Not everyone can be a leader. The family usually designates one family member, or a small group, to make the important decisions. However, this group must ensure it keeps the rest of the family in-formed, and seeks its buy-in for principal decisions.

MITCHELL FAMILY photo: (back, left to right) Andrew Mitchell, Scott Mitchell, Russ Mitchell, Bob Mitchell, Todd Mitchell, Bill Mitchell; (front, left to right) Jack Mitchell, Linda Mitchell, Chris Mitchell. Jack & Linda are parents to Russ, Bob, Andrew & his twin, Todd, & Bill is the father of Chris & Scott.

The Pritzker family of Chicago had a trio of third-generation family leaders who each led a division of its vast business empire. However, a very public lawsuit broke out when the nonactive family members argued that the managers did not adequately inform them about how they made decisions, how they compensated executives and the nature of the family’s various trusts and business entities. When executives do not share information with the owners, suspicion and distrust may arise and weigh on the business, as this high-profile dispute did on the Pritzkers.

Family Frontier
Robert (Bob) Young inherited hundreds of acres of rich farmland in California’s Alexander Valley when he was 16, after his father, Silas, died in 1935. With his sons, Jim and Fred, he worked the land, producing grapes that were sought after by premium wine vintners. They worked together, often joined by their sisters, JoAnn and Susan, who were always available to assist in the family enterprises. The family recently established its own winery, featuring its own labels: Robert Young Estate Winery Scion and Chardonnay.

As Bob entered his 80s, with his adult children approaching the half-century mark, their children, the third generation, ranged in age from 4 to 40. A host of issues emerged. Their wine was well received, but the high-end wine market is very competitive and labels seeking to compete there must be well managed. The whole family had done well economically, but the future was less certain. The third generation would inherit the business, but it could not expect the profits to support its members indefinitely.

The dozen members of the third generation were not as close to the land as the second generation, but they felt deeply connected to the family heritage, and wanted to know how they could become involved in the wine business. Like many families, the Youngs did not talk much amongst themselves about the business, the future or money at home. They respected Bob’s right to make decisions about his estate, and they knew he would do right by all of them. But they were not clear how the business would evolve, or what to expect.