Yanson versus Yanson

Ownership is a right of possession. Stewardship is a fiduciary role. It is holding the institution in ‘trust for’ the next generation. We feel, as a family, that this institution has been passed on to us for our care and not for us to dissipate or do what we will with it for our personal gain.” Jaime Augusto Zobel de Ayala, 8th generation member, Ayala Group, 185 years, established 1834.

One of the top stories that circulated in the business community the past few weeks was about a feuding family based in the South.

The last name may not ring a bell to many, but the family through its group of bus companies is the country’s biggest operator of buses, carrying a quarter of a billion passengers annually all over the archipelago.

The group is popularly known for its Ceres Liner and Vallacar Transit.

It is headquartered in Bacolod City, a highly urbanized city located in the southern part of the Philippines, and operates a fleet of 4,800 buses nationwide.

Its closest competitor, Luzon-based Victory Liner, has close to 800 bus units.

This is the Yanson Group, in almost every which way, a corporate fairy tale.

Until a few weeks ago, that is.

History of conflict

The long-running saga has now taken an ugly, even sinister turn.

The simmering rivalry between the siblings, four against two including the matriarch, threatens to rock the empire to its foundations and throw up some very dirty linen in very public spaces.

Last week’s remark by the new president that there were “trust issues” against the ousted president brought into the open what was suspected ever since Ricardo Yanson Sr.’s death in 2015: that the battle for control of the spoils that afflicts most Asian families, when a powerful patriarch passes away, had visited itself on the country’s most admired transportation company.

What may have started as petty misunderstandings among siblings during childhood turned into a volatile brew.

Eventually, the conflict turned into a hostile corporate takeover by one group comprising four siblings.

This brought into the open the messier underpinnings to the conflict and offered a revealing glimpse into a longstanding and successful family business that has been haunted by internal squabbles.

The stakes are massive.

On top of the billions of pesos’ worth of assets is the split, still unofficial for now as the court is still evaluating the positions of both parties, yet inevitable after the recent development where the company president, younger sibling Leo-Rey, was ousted in a boardroom brawl.

This action has cast a shadow over the Yanson empire and raises uncomfortable questions about its future. The current battle extends beyond the two warring sibling groups. It has spilled over to other stakeholders caught in the crossfire.

And the most vulnerable are the 18,000 employees whose lives are entirely dependent on what will eventually play out in the coming months.

The root cause

What really caused the meltdown? A generational transition is a critical point in the life cycle of a family business. Business owners believe they have a foolproof succession plan in place, but problems arise when the founder dies and carelessly passes the torch to a successor that may not necessarily be acceptable to the rest of the family.

As the business transition from first generation (owner-managed) to that of sibling partnership (second generation), careful collaboration is needed to accommodate the diverging needs of the surviving spouse and the adult children.

From my perspective as a family business advisor looking from the outside in, it is very clear that sibling rivalry, ego, jealousy, money and emotions are among the reasons why the conflict erupted.

I am certain that the squabble reached boiling point due to the family’s poor handling of the events leading to the power struggle.

Ownership and control

The current dispute is all about ownership and control of the bus empire. This is often due to the traditional Asian practice of giving equal inheritance to the offspring.

While this gives a fair share to each member of the next generation, this diluting event automatically diminishes ownership of the firm leading to a complex transition, more minority owners who lack commitment but are entitled, and fragmentation and instability.

Complicating this tangled ownership process is the lack of institutionalized mechanisms for conflict resolution.

Inevitably, this can lead to family members resorting to external bodies such as the courts, shareholder votes and media, while refusing to talk directly with each other.

When families turn to lawyers and the courts, it is very difficult to restore trust.

This is the Yanson family dispute unfolding.

It is a live case of family acrimony worth monitoring as it is headed toward tragedy.

My advice to the family is very straightforward: It is time to stop this madness and talk about the difficult issues. Only when they talk, will they be able to solve something.

To borrow a quote from Tan Sri Long Poh Kon, a third generation successor of Royal Selangor Group, a 130-year-old family enterprise based in Malaysia, “My father told me to beware of family feuds. If you have family members contesting over the pot, then nobody looks after enlarging the pot. We are merely stewards of the family wealth, which is to be enjoyed over successive generations.”