Dennis: This winery has been in business for 32 years now, and certainly the
idea of how to keep it ongoing is not a new topic. Years ago, we drew up a
family pact—basically a set of key ideas, ground rules and agreements on how
things would happen. Our independent board of directors and parents had kind of
empowered us to go do our own version of this document. [Our parents] had a lot
of input on how the first one went, because it was their family. But once they
step down, then it becomes our family pact.Steve: We had a dialogue about common visions. These discussions were more than
just Dennis, Bruce and I trying to sort out the business, but laying down
guidelines so other family members as they joined—or as the kids grew up—could
understand how we want to operate. And that’s how we came to the family pact. We
had to negotiate our selected interests and challenge ourselves, because we were
not writing just a document to allow Steve, Dennis and Bruce to operate, but
something for future generations as well. Dennis: There are some legal aspects to the document—a buy-sell agreement for
estate planning if parents are gifting stock or passing on stock or selling
stock. It ensures that if someone gets divorced—or if someone walks out—then we
know how those shares get repurchased or sold. Bruce: It’s always a reference. But that doesn’t mean that it can’t change as
the family evolves. It’s something that you can come back to every 10 or 15
years and ask, “Are these ideas still true today?” and be able to have that kind
of frank discussion. Steve: The first point [of the family pact] was recognizing that a successful
business was important to the family’s success. Family members also required
ways to come and go in and out of the business. The third was that we needed a
way for family members themselves to participate in the business if they chose.
And the family pact reflects those three tenants. Making the Decision
Bruce: We conducted the succession negotiations over three different meetings,
spaced out over three or four months. We had a third-party facilitator, Craig
Aronoff, with us during this process to make sure we stayed on track and
considered key issues. There were some initial discussions; then we drew up a
plan. We made sure that we had buy-off at the third meeting before drafting our
presentation for our parents and the board. Dennis: Part of our challenge was that my parents ended up with three kids who
all demonstrated that they could do the job. But our conclusion was that we were
better off sticking together, and figuring out how to solve all those
problems.
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