Readers ask about sensitive matters | Inquirer Business

Readers ask about sensitive matters

We are merging with a potential partner to ride out this pandemic,” says reader S. “But we don’t want to give up control. We want more than 50 percent, and so does the other side. We are deadlocked. What do we do?”

My reply: Ask your lawyers or bankers about this. As a rule of thumb, the party that contributes the most financially to the merger has the majority share, and thus, voting control.


If you are deadlocked, then think outside the box. This is rarely the case in the Philippines, but some research shows that in case both parties intend to contribute equally (in financial terms), then a 50-50 split may work. This builds trust early on in the merger.

A 50-50 split was the fateful decision of the Mondavi family, one of Napa Valley’s most illustrious winemakers.


The late Robert Mondavi said in his book “Harvest of Joy” that partners should be equals: “With a 50-50 split, neither side can impose a decision, and [this] builds cooperation and trust.”

Using this framework, the Robert Mondavi Winery successfully partnered with global family businesses, including France’s Rothschilds, Italy’s Frescobaldis, Chile’s Chadwicks, to the benefit of all parties.

Governing beyond the grave

“Our father was brilliant but uncompromising,” says reader J. “Before he died, he made sure in his will and in his trust that what he wanted should be followed, or else. I cannot give details, but some provisions are not sound, and we don’t want to follow them. What advice can you give?”

My reply: I give the same advice as in the letter above. Ask your lawyers and bankers about this.

As far as I know, it is extremely difficult—almost impossible—to overturn the provisions of a trust. Remember that trust provisions are initially proposed to safeguard family wealth and good custodians of the trust will ensure that family members do not violate such provisions for their own ends.

If your family is united, though, and all of you (and I mean all) agree that for everyone’s benefit, certain provisions no longer make sense, then make your case.

After all, the patriarch is no longer around.


Founders, by hard work and force of personality, often attain mythical status, mostly deserved. But with changing times, their wishes may not be as sound as when these were first proposed.

As early as 1791, American statesman Thomas Paine said in “The Rights of Man”: “Every age and generation must be free to act for itself in all cases as the ages and generations which precede it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies.”

Good luck.

Going public

“We want to be a publicly listed company soon,” says rea­der D. “I am a third generation who is pushing for this so we can become more open in our dealings and grow into a better business. We are hiring professionals for top positions, but the CEO we pirated has not done well. What can you advise?”

My reply: Going for an initial public offering is a huge step, and can indeed help you grow and be more transparent.

However, “listing shares is not on its own sufficient to shed light on how a family-controlled group is run,” said The Financial Times in April 2019.

“The danger is that families seek protection from outside scrutiny in complex structures—the [Korean] chaebol’s shareholdings, or the cascades of ‘Chinese boxes’ that Italian families assembled to keep a hold on their business empires [before].”

Work toward your public listing, but keep in mind that real transparency only occurs when family relationships are stable and management structures encourage such.

Qualified and trustworthy professionals within the company should be in the running for top posts, especially since they can deal with family sensitivities. (See “Much ado about hiring,” Feb. 7, 2020).

A common mistake is to hire an outside CEO based on resume and not on psyche, who has the smarts but whose personality and mindset may not be a good fit with family owners and managers.

Queena N. Lee-Chua is with the board of directors of Ateneo’s Family Business Center. Get her book “All in the Family Business” on Lazada and the e-book version on Amazon, Google Books and Apple Books. Contact the author at [email protected]

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