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True StoriesMel Holson:
Family Business Owner
In his current career as a consultant to family businesses in matters of succession, Mel also draws on his personal experience. He spent 40 years with The Holson Company, started by his parents in 1943 as a manufacturer of albums to hold 78 r.p.m. records. Mel and his brother, Shelly, took over the business from their parents and ran it until they sold it in 1986 to the Bain Capital Group. It is now a division of The Newell Companies. Mel is an arbitrator and mediator for the Commercial Panel of the American Arbitration Association in New York City and Hartford, and has served or is serving on the advisory boards of Calex Corporation, The Kerschner Companies, SnowBird Bottled Water and James Dew and Son. He is active in civic affairs in his hometown area of Wilton and Weston Connecticut, including six years as a director of Devil's Den, a Weston Nature Conservancy property. Succession Issues Close to Home Complementary skills made the Holson brothers a good team for The HolsonCompany -- Shelly, the technical expert, and Mel, handling marketing and sales -- and they worked well together. Under their management, the company expanded its manufacture of folding cardboard picture frames carried by millions of G.I.'s during wartime, to become the leading producer of photo albums in the world. In time, the next generation -- Shelley's sons and Mel's daughter -- entered the business, with the expectation of yet another smooth inter-generational transfer of management. This was not to be. While trying to sort through the problems of management change, he attended the Small Company Management Program (now called OPM-Owners & Professional Managers) at The Harvard Business School over a three year period, one of 80 other family business owners, most facing similar issues. The involvement with classmates and faculty sharpened Mel's interest and awareness of the problems of management succession in closely held enterprises. It also gave him the tools to solve his own. "We hired Leon Danco, one of the leading experts in the field, and the author of several books on the subject, to help us formulate a plan. We determined that the kids were not ready to take over the 500-employee business, so we decided to bring in an interim management team including operations, financial, marketing specialists and human resources people, who would report to us," Mel said. After two year of disappointing performance, the Holson brothers took their company back, nurtured it back to health for another year, then sold it. Mel had a three year contract with The Holson Company which was renewed, but his personal experience with succession issues left him "fascinated with the process of transitioning a business from one generation to the next. Shortly after we sold the business, returning from a skiing trip to Aspen, I found myself sitting next to a man from Brooklyn who became my first client. This case was a classic struggle for control of a company between the sons of the founder and the founder, with the founder's new wife in the wings. We worked with the company's accountant who had a long history as the company's auditor and chief advisor and we developed a plan that assigned gradual stock gifts to the sons and a life insurance policy naming the stepmother beneficiary. After the solution, the boys found it easier to accept their new stepmother since she was no longer perceived as a threat to their eventual control of the company. "What makes my work exciting is that every client is quite different from the next. I've given thought to writing, doing workshops and teaching others about family business, but I prefer going into the trenches, one-on-one, and creating solutions for these families. It takes a lot of probing with each family member to get at their truth, and putting together a plan based onthat. I usually stay involved at this point because even family members who agree have a really hard time implementing. So I stay until everyone is satisfied with the way the process is evolving. "It usually takes one person who has a vision to direct a business. That person has a business plan, whether it is written or not. As founders get older, they are less ready to take risks and less likely to take on dynamic measures that will make the business grow. The younger generation, however, is looking to make their mark. Even if income is not the issue, it's a matter of their developing their own plan based on their vision and their responsibility to communicate the plan to their associates. As long as the senior founder is in place, the second in command usually can't change things much and can't make major changes. Two things that have to happen when a business changes from the top: 1. There has to be a transfer of ownership and 2. there has to be a transfer of managerial power. These are not the same thing. "I read recently that there is another trend in family business. Young entrepreneurs, mostly in technology, are hiring their parents to help them out, luring many out of retirement to do so." Clearly, Mel Holson will have no shortage of family business clients. Getting Started Some transition tips from Mel Holson: 1. Make sure that management control rests with the heirs who are controlling the management of the company and not spread to all heirs of the estate. 2. Recognize and respect the needs of the founder while transferring authority and responsibilities. 3. Consider forming an advisory board using outsiders who have business experience to provide the newer, younger managers with seasoned advice. Reach Mel Holson at: The Family Firm Institute, Inc. Home | True
Stories Copyright 2000 2Young2Retire.com, All Rights Reserved
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When he was
five years old, Mel Holson, 74, saw a photograph being developed and was instantly hooked.
He would go on to do research for the U.S. Army Air Force in gun cameras, and become an
avid photographer, a passion he still pursues as member of the Photo Marketing
Association, Professional Photographers of America, and Camera Craftsmen of America.