
A $500M Family Feud - who-knows
https://torontolife.com/city/inside-500-million-family-feud/
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duxup
I'm involved with a fairly substantial business (banking and etc related) that
was built from the ground up among a core group of partners, and then later
acquired other small banks and banking related businesses that similarly
involved tight knit families and community ties.

The presented a real problem, that the folks in charge addressed pretty
quickly.

The problem was that everyone felt emotionally tied to these businesses that
they had built up, their families and communities in many ways identified with
them. Many of them operated in small or suburban sized communities so they
weren't just some random business to the families involved.

But as it grew it was clear it wasn't "dad's bank" or such anymore as far as %
of ownership went and so on. The individual "dads" or other owners made those
deals and understood it, but the question was would their families understand
and could that create conflict?

Obviously after acquisition / offering additional opportunities to buy stock
(this was a privately held company) things changed and maybe not everyone was
on the same page and they wanted to avoid any conflict if someone showed up
thinking they were in charge who wasn't... but still had a big enough piece of
the pie to cause more than a futile legal fight.

The solution was that the bank (actually the holding company that held the
bank and other entities) would be employee owned (i'll not get into how that
works just for the sake of brevity) and effectively the old guard would only
be allowed to own X% of the shares. Any shares transferred to children had to
meet certain criteria (only so much could be transferred) and events like
inheritance often would require the shares to be sold back to the holding
company at a given price (they had a system of internal and external
evaluations to determine the pricing).

To date it has worked out pretty well. Perhaps the answer to some of these
issues is to simply not to pass the business on whole hog, at least not in a
manner where control is an issue.

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SOLAR_FIELDS
These kind of problems seem to be a pervasive pattern when family tendrils
snake their way into a business.

I know of a similar business that has had an almost similar implosion. Run by
a patriarch and matriarch husband-and-wife duo, a small fortune (much less
than the company in this article) of money was made in a niche manufacturing
sector. The patriarch proceeded to take large chunks of the fortune and
hemorrhage it out into passion projects (he also owned a thoroughbred racing
company that bled money, just like the people in the article!).

Husband and wife would often times argue and try to bring employees into their
drama and force them to take sides. Divorce was threatened several times.

Family members all worked for the company and came in to get a scoop of the
ice cream. The company’s core business didn’t really diversify since the owner
was focusing on all of these money wasting pet projects and as such when their
main client scaled back their business the company became a shadow of what it
once was.

Bottom line: mixing family into your business can turn out to be a risky
maneuver.

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privateSFacct
A few major factors for this with the very wealthy.

1) If you have $1B an attorney will tell you that you can win the case. You
are surrounded by yes men and women in many cases.

2) The court systems are not well setup for these cases. They let them spiral
way over page length / deadlines etc. Compare to someone facing 5 years of
prison - often adjudicated in relatively short order

3) For all sorts of gimmick reasons people create odd structures.

4) The people involved are used to getting their way rules be damned.

If we cared about fights of the rich if you just were allowed to take previous
assertions at face value and kept the process tight things would move more
quickly.

ie, if in previous cases / situations you claimed to have no control / no
interest in an entity (liability claims / previous divorce claims / tax claims
and structuring), then for purposes of current litigation that is what counts.
All the blind / hidden beneficial owner / undated resignation letters /
overseas tax and other gimmicks would be diminished here.

Put the page limits back in on filings to focus the armies of atty's. Nothing
an attorney likes more than a vindictive budget be damned client who can
afford the hourly rate.

~~~
vageli
> If we cared about fights of the rich if you just were allowed to take
> previous assertions at face value and kept the process tight things would
> move more quickly.

> ie, if in previous cases / situations you claimed to have no control / no
> interest in an entity (liability claims / previous divorce claims / tax
> claims and structuring), then for purposes of current litigation that is
> what counts.

It sounds like you are getting at the concept of estoppel.

[https://en.m.wikipedia.org/wiki/Estoppel](https://en.m.wikipedia.org/wiki/Estoppel)

~~~
privateSFacct
The problem is the public interest is not usually well represented here.

For example, Rich person A in cahoots with Trustee C claims no interest in
(untaxed) asset B. When they litigate against each other Trustee C can
struggle with estoppel because they themselves knew transaction was a sham so
in communication with C rich person A WAS clear that they intended to maintain
control.

We need to have something like an absolute public interest estoppel. If you
assert something to the government or in court that reduces your taxes /
avoids liability etc, then what you said to anyone actually suing you not
critical.

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THJr
It's interesting to me that arguments about inheritance are one of the
connecting factors across classes of wealth. I've known people that act this
way over a $100 coin collection.

~~~
bumby
A literal example of the “endowment effect”?

People over value items beyond the actual value because real or assumed
ownership perverts rational behavior

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coldcode
Rich people can be idiots as well as any of us. The difference is they have
money to blow on insanely expensive lawyers and crazy schemes and still be
rich (usually). But in the end none of these people will ever be happy and
none of them will take any of it with them.

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horsebatteryst
The $55m sculpture alone represents a huge misallocation of human resources.
Equivalent to 1,255 _years_ at $15/hour.

Does capitalism oblige us to let this guy waste >30 people's working lives on
something so obviously pointless?

~~~
dragontamer
[https://www.investopedia.com/terms/l/lawofdiminishingutility...](https://www.investopedia.com/terms/l/lawofdiminishingutility.asp)

A dollar spent by a billionaire is going to be less efficient than a dollar
spent by a working-class person. Its just economics.

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purple_ducks
How have we as a society not outlawed the phony hiring of family members in
order to financially enrich them far beyond what they could earn/should earn
for the work they do?

