Welcome back to another episode of the business brothers podcast. My name is Purdeep Sangha and I'm Harjeet Sangha. And guess what we are right. Brothers never in sync. This has given me an interesting conversation today. We have an awesome guest coming on, live here pretty soon. This gentleman has been in, I'm just going to say the nitty gritty and dirty when it comes to family businesses and, and dealing with the fun stuff, but also the nasty stuff that comes along with it. So we're going to have some fun today with Phil, Chris Beld here. He is a family business advisor and mediator. He's got the lovely task of helping people get on the same page. So Phil, thanks for joining us today.

Thanks guys. Great to be on. Yeah.

Yeah. Well, I'm excited to have you on here because you know, you're the guy and we've had some good conversations about this. You're the guy that we bring in to, you know, you're like the special forces when it, when it comes to things going sideways and family businesses, not going the way that they're meant to go and, you know, relationships fall apart, businesses lawyers get involved, it gets nasty. I'm sure you've seen it all. And we want to hear about it, but you're the guy that comes in to help calm things down. Right. And to bring people back together.

Yeah. You know, pretty, I've told people a bit of a firefighting job, you know, working with other advisors, you know, guys like yourself, accountants, lawyers, especially the long time family lawyers that don't want to dance in that cesspool of conflict. I sort of get pulled in to smooth things over. So the process can continue on sometimes as part of the process. And sometimes it's a bit of a hit and run, but it's never usually as easy as it sounds. But I, I tell people that I get called in to deal with the stuff that nobody wants to deal with. I mean, there's no nice way to say it.

Yup. That's why I say the special forces, but let's get into this, you know, we, this is a serious topic and all and all joking aside. Right. We joke about it here because it's, there's a little bit of comedy and we need that. But things, things get nasty, Phil, right? Yeah. They do. And what do you see? Like if we were to say, you know, family's not working out or situations going sideways, what do you think are the biggest causes of that?

Well, it's, it's really, I mean, just about all of the issues can be dialed towards, towards communication or lack thereof. Communication in a family business is so much more important because it's got to start young and early, you know, it's got to start. I mean, there's so many, you know, those of us who are students of the family business dynamic, you see things where kids at 12 years old are included in family business meetings, you know, meetings with the family members, what the shareholders to begin to indoctrinate them. It becomes about setting expectations and correcting offsides early on often. You know? And, and I can't stress that enough because most of the time when I'm dealing with that next generation, that just aren't playing nice. And aren't getting along the, the bad behavior of the past and Hey, we've all done it present company included. I'm sure it was never corrected. It was just never, it was never addressed. It was never called out. No one was ever called out. It was allowed to, to manifest and generally leads to bad behavior when their siblings working together. So dialing it back to the communication as is usually one of my first steps. Like how did we get here? We're in a bad place. How did we get here? How do we fix this? And how do we not get back here again?

Yeah. I'm glad you, I'm glad you mentioned that because how do we not get back there again, because I'm sure a lot of us have gotten in this situation where we think we fixed something and then it just creeps its nasty head back up, right?

Yeah. I, I mean someone once referred to family businesses, a tire fire, some of them burned for 10, 12 years, you know, and you never fully extinguished and that's what we want to avoid.

Hmm. Interesting. So hard is, I don't know if you have any questions, but I got a ton of questions for Phil here.

I do. And Phil, I just wanted to kind of start off the phrase that, you know, we typically say in family businesses, succession planning, it's a process, that's not an event. So from your earlier comment, it sounds like maybe most oftentimes it's, you're brought in kind of near the tail end when things start to pun line to a point or almost a boiling point or breaking point, do you see opportunities where you've been brought in or have you been brought on, on the earlier stage where families kind of sense their turmoil and contentiousness and maybe bring them in early so they can avoid that, avoid the pitfalls or is that kind of one of the things where you just say, wait until things blow up and that's normally when you're brought in,

It's a great question, actually Harjeet, because like I've got a few clients now where I'm in, in prevention mode, you know, we in particular, a client in the agriculture business I've been working with for seven or eight years. And what triggered them was they started getting some exposure into one family business goes bad. They had to deal with a brother who had a substance abuse problem who was a partner. They had to deal with that mess. So from a family and an emotional side, it was tough. But from a business side, it was a big challenge. And then along, not long after in bumping their life insurance, because, you know, farmers, you know, they're asset rich. So all of a sudden the value of their land goes up. One of the brothers was determined to have some kind of rare cancer and he passed away shortly after.

And my role there is to keep these guys happy and together. So there's really minimal minimal conflict work. It's just to be that outsider, that sort of rudder that can, you know, am I being crazy because I think this, this and this and my brother, this, this and this, I have to bring them back. So it's really a prevention. That's really an preventive mode. There was no, there will be a, a, an event, a sales event at some point, I don't know how far down the road, but there'll be a sales event. Cause you know, builders want land and we're not making too much more of it. And when that happens, how to manage the emotions around it, you know that I know you guys deal with, you know, in terms of brokerages and selling businesses, there's a massive emotional component that just doesn't always come up to the surface. So it's, it's about managing the expectations to prevent the conflict. So yeah, there, there are some proactive clients. I call them where we're doing succession plans, we're doing shareholder agreements. We're, we're plotting through rather than me to dad's lawyer's office to sign this. They're they're, they're invited into the process, not being told what the process was and here's where we are bringing your path.

Interesting. And Phil, I've got a question for you. So how do you, how do you start those conversations or how do you get people to come to the table and have conversations when they don't want to, when they refuse to communicate?

And you know, that's a great question because what I do then as I put on my mediator hat, and one of the things we do in a mediation where people are, they're just not happy to be there. They're not happy. They're in a room with somebody. They don't want to be with whatever the case is in the mediation, whether it's state mediation, property, property, mediation, anything, no one wants to be there. I hate to say, there's a, there's a little tool. We call it our BATNA best alternative to a negotiated agreement. Really? The question is, what does this look like if we don't fix this today? And that will usually bring the naysayers and those that don't want to be part of it on side, most of the time, most of the time, those that don't want to participate and don't want anything to do with it. You know, it's, it's sometimes you tap out and you come back at another time at another angle, you know, you just can't have that in my role. You can't have that stubborn. You will see my way and I'm not leaving until you do attitude. It just doesn't work. Because then you get to find whatever you want to get out my office, whatever you say. And then there's no commitment.

Yeah. We see that quite often, the stubbornness, the hardheadedness and I've come across this a few times. What do you, what are your thoughts on families who use, let's just say a non-trained mediators, for example, they use people in their family network or friends to help mediate the conversation. What I've found is that actually makes things worse.

It can because, Hey, they're not trained, but, but again, if it's a trusted family friend who's been in business, sometimes it can at least begin the conversation, but usually, and forgive me for being a generalist and even a bit sexist. Cause I don't mean it that way, but that person you're talking about, Purdeep, it's usually one of the dad's guys, right? I mean, you know, dad's body who is an accountant dad's body, who's a financial advisor, you know, he knows this stuff. He can help us as that next generation. That's still dad's guy. You know, nobody's really, truly, you lose true neutrality when you bring that type of person in.

Yeah. In our language, we like to say that people that come in there, everybody has their own bias. Right. Everybody has their own thoughts. And especially if you've been part of the family for awhile, I believe that you have some, there's some kind of vested interest on one side or the other side in our language. We say, people like to add the masala, which means spice to things, right. They like to add on their own little, 2 cents and spice to it. And as you, as a mediator yourself, I have to ask you, how do you stay neutral? Like how do you really communicate the message between the two parties without putting your own spin on things? Or do you put your own spin on things to get the message across?

You know, you know, when you're really truly dealing with a dispute between two sides in a family business, let's say, you know, confession time, I generally have my own opinions of who's right. And who's wrong within 10 or 15, I'm not, I'm not there to give them my opinion. I'm there to help them understand each other. So the way I try to explain it, as you got two people who are this far apart slowly, we got to bring them a little bit closer together, you know? And that might mean a lot of active listening. You know, like, like I, I explained it to somebody who wants, who'd never been in mediation and was terrified. I said, never watched the parliamentary challenge, the parliamentary channel. And, and I said, who do they talk to? Well, that always talked to Mr. Speaker. I said, right. So they're not calling Mr.

Speaker a jerk. They want to call the other guy a jerk. But they said, this was sneaker. That guy is wrong. Okay. I'm the Mr. Speaker. So people are directing the conversation to me. The other person's job is to make sure they listen. My role is to create a safe, neutral space and make sure that each side is being heard. That often leads to some kind of a burn through because most mediations are negotiate, become a negotiation, you know, okay. If you get this one, what do they get? And we'd begin. But that doesn't start out that way. You got two people who don't really like each other and I'm being as polite as I possibly can be. They don't want to be there. They're under their gear against their, their will generally. And they have to be, they have to hear one another without talking to each other because the emotions of talking to each other is a barricade. So that's really, I hope that answered that because that's really the role of the mediator. I just say, watch the parliamentary channel and see what the speaker does and wonder who the hell wants that job.

Okay. He's got a bunch of adults who were supposed to behave and they know how to behave, to behave. And they all yell at him all day long or her that's really the role of the mediator. Interesting.

So it fell there. I got a quick share. It kind of extrapolate on that. So it sounds like in your role, in your profession to really be successful, you gotta be a really good listener and be able to, you know, to bring, you know, individuals who probably have opposite feelings for each other, you know, to an agreement, but what other skill sets do you need to be successful in, in the work that you do?

Well, I mean, I've taken some extensive training around family business dynamics through a, I'm a designated FEA family enterprise advisor, which is a newer designation in the last dozen or so years. And there was a whole lot of training around aside from the empathetic. I'm a nice guy. I want to hear you. Please tell me aside from the soft spot, there's some technological steps in getting through the journey of succession. And to your point it's, it's, what's the other expression. It's a marathon. It's not a sprint. It's not, it may culminate in a transaction, but it's not a transaction. It's a, it's a, it's an evolution. And so there was a lot of training around that was about a year long training through UBC, believe it or not right in your backyard. And it focused all on the multidisciplinary team. So I've been trained on how to work with you guys with a difficult client. How do we work together? How do I work with a legal team that may have to be drafting an extensive shareholder agreement? So quarterbacking and being part of that multidisciplinary team is a real key value. You know what they say in this world? Know what you don't know? So if we go in an area that I'm not sure of, I'll tap in the expert, you know, I'll tap in the lawyer to come in and say, let's have a meeting talk about this and keep it focused.

I love that analogy of the quarterback perspective. It's. So from, apart from the lawyer and accountant, what other professionals would you be bringing in to kind of help support the, the media?

Well, I mean, in dealing with a business or family business or partnership, always valuations off to play into, you know, and as you know, in the valuation world, what it's actually worth and what everyone thinks it worth, they're never the same. So, you know, there's valuation processes that have to be done. There is sometimes an engaging, especially with next generation, we're engaging a legal team. It's amazing how many of those next generation, they don't have wills. They don't have power of attorneys. They don't have, they don't have a lot of their own personal stuff in order either. I, I mean, not, not share too much, but I'm working with a family business that does not have a shareholder agreement in place because one of the partners she's in a really bad marriage and her sibling doesn't want to do a partnership agreement. If he's just, if she's going to end her marriage and create an entire legal storm that will fall on the business.

And I've seen where that's happened as well. We've got, I've got work with another client where one of the family members, he loved getting married. I think he was on a third time, you know? Well, last divorce, he had cost the company, you know, quarter of a million bucks, forensic accountants should, you know, a woman scorned. They say, doesn't, you know, she didn't take things well, auditing the auditing, the business corridor audits, quarter forensics. So we just added a clause in the agreement. Any shareholder who was unmarried at the time of signing must have a prenuptial agreement satisfactory of the corporation prior to their wedding date, or will have deemed to have forfeited their shares. So next time he wants to get married. He better really love her because either he's going to get a prenuptial agreement or he's going to forfeit millions of dollar, sell back, not loose, but he's going to have to sell his shares back to the company who will no longer be a shareholder.

That was one of the harshest things we had to put into an agreement. But for him, he quietly said how he was delighted. It was in because he wanted a prenup. But now he says, when he talks to our, and I don't know how it worked out, I wasn't invited to the wedding. If there was one. Now he says to her, if I, if we don't have a prenuptial agreement and I marry you, I lose my share of the business. So if, if his bride to be can't acquiesce to that, then maybe he shouldn't marry her, you know, again, harsh. And it goes personal, but family businesses personal.

Yeah. That's a tough one because prenups are always touchy as it is. You know, there's, that's, I've seen some,

But people who have had to ask their future spouse for a prenup, I read a series of articles that talked about how much easier it is. If somebody else externally demanded that they have the prenup, you know, Hey honey, it's not me. It's them. It's not me. It's the lawyers. It's not me. You know, because try and extract some of the, the hurt out of that because it's hurtful. I mean,

I would agree with that fellow. You don't have an, a prenup myself. I'm on my second marriage and I just don't plan to have any more after this. But I mean, there are delicate conversations to navigate around. And I think having it from the opposite lens or perspective does make it a little bit easier. Of course, they're there. They're not simple. They do involve emotions from both sides. But I think from the angle that your approach is it's probably one that probably will solve for the conversation

And they have to be fair. Like I was part of a discussion that was working on a prenup that was not fair. And I said, I'm out. I don't want to be part of this. They said, what do you mean a prenup is there to protect, not to screw somebody it's like buying insurance. And if your thought process around a prenup is to give it to the other person, if something goes bad, I'm not, that's not what it's intended to do. It's there to preserve the family wealth within the bloodline. But if the value of your shares have gone up dramatically, she's entitled to half of that. No different than if you bought a house and the house is worth double, your marriage ends you're, you're giving her half of that or him half of that upside. It has to be fair.

Yeah, I think on that point too, I think the business also needs clarity in terms of, you know, if there is an unfortunate breakdown in marriage, where does it liquidity come from? Right. And it could be simply stated in the shareholder's agreement that the liquidity comes from outside the business to make it fair. Right? So at the end of the day, life insurance could be personal investments, real estate, but you know, to, to kind of force that liquidity event upon the business could actually, you know, position in an unfavorable way to synopsis succeed in the future, which would be detrimental to both parties. So, I mean, done right. Done correctly, done fairly. It can be a really enhanced tool to, I think even, you know, maximize the value of the business and provide kind of a level of comfort between the two individuals, the two spouses.

Yeah, no fairness above all, as far as when things like that have to be brought into conversation. If it doesn't, if it isn't dealt with a fair hand, it's going to go bad. I, you can, you can guarantee it.

I'm going to circle back to something that you said before Phil, when you were talking about negotiating and mediation, how, how closely tied are those together? Does a trained mediator, should they have negotiation skills? Is that part of the program? Is that part of the training and are there mediators out there that are just strictly about mediation and bridging communication rather than negotiating?

You know, sometimes some would say it's, there's no difference. The different to me, the differences mediation is understanding why we're at all right. I mean, why are we at odds, wrongful dismissal, as an example, let's pull it a little bit away from the family business and the family dynamic, wrongful dismissal. I've been terminated from my job at 20 years. My company gives me a weeks and I've got a mental health disability. I Sue for wrongful dismissal. Do I want to repair the relationship? No, I want to be treated fairly. I want to be treated fairly plus a little more. And so that really, you know, you're going to a negotiation, most disputes that, I mean, I don't do family, ironically enough, working with family businesses. I don't do custodial separation, marital breakdown. I don't do any of that work because it's generally purely based on emotions.

Whereas the mediation work I do is it's emotional, but it's emotional about stuff and stuff is usually money. You know, it's like working with clients on dealing with an estate. When there's a mediation on an estate, I leave you the cottage and I leave you my, my car collection and you get my coin collection, you get my house. The only thing that's divisible equally as money. So if it's going to be things that are not going to be equal, someone's going to be offsite. So I don't want the cottage. I want the coin collection that dad said I could have, but what else am I getting to make sure it's equal? Boom, we're now we're now in a negotiation. It's not. And by the way that the negotiation, I missed an important step with a lot of mediations, what may move into that negotiation phase? People are separated out, okay. We go into what we call caucus. Okay. And I think I have, oh, I do. I have one of my special mediator pens. Remember these pens, you guys might be too young to remember these.

These are, these are the coveted pens. When you were younger. These are my mediation pens. Each party gets a different color and I go room to room and start figuring out how we're going to negotiate, slice and dice down into bite-sized pieces. Let them know this is what the process is going to be. And, and, and at the risk of, of squashing, the whole excitement around this process at the end of the day, a mediation is not non-binding. So we can spend eight hours. I work with an insurance company, they were being acquired and two of the partners were at all. And I spent three days, 12 hours a day in the board, or hammering out item by item. And it sucked. It wasn't fun, but, but at risk was, these guys were a couple hundred thousand dollars, a couple hundred thousand dollars apart. And the buyer, it was an $80 million acquisition that was about to go down the toilet.

So what's it going to take, you know, and it took a while to get to that. It took two days to get to the discussion of what's this going to take, you know, sometimes, you know, you're reaching her pocket and you think I'll give you the a hundred bucks, just let's move on already. You know, and sometimes, and you know, sometimes this particular case, it got really nasty and dirty because one guy who was altering his commissions, because he didn't want his ex-wife to clot out of their settlement, you know, back then to the marital discord. So he purposely did things so that she would get less and it turned out with this whole purchase, his little game of making sure she got last, he got way less. So that's why I talk about fairness, fairness above all.

Yeah. It comes around in some way, shape or form.

Eventually he tried to stick it to his ex-wife one way. And this acquisition, he, he, he probably law. He probably saved about $200,000 of giving her. And I think he lost out on about $3.2 million in the acquisition. So be upfront, be honest, communicate with your partners, your S your family business partners and your shareholder foreigners.

Yeah. I think that's some really great, great advice there, Phil and so hard. Do you have any last questions here before we wrap up?

So I do. And I think it's very timely that we talked about. Roger's a very public family dispute. I'm sure you've been answering this question from a lot of other individuals, but let's just say you were brought in, in mediation for that particular file. Where do you start was such a public facet of, of kind of family?

Well, most FA their issue started way before the public knew about it, right? Like you have to assume before the public knew about it, there's been all kinds of stuff brewing below the, below the surface in this particular case, the little that I know, and I only know what has been exposed to the public with newspaper articles and that sort of thing. I have no insider info, like promise. I really, it really came down to a point of law. Okay. The son, you know, did what he believed the law was on his side for what he was doing. His mother and sisters didn't like it because he was building his own board so he could run his own thing. And he also controlled most of the trusts that controls most of the shares. So their reaction to not liking what he did was to begin legal action.

And they ended up losing the only people who truly won as, as you know, there's a whole lot of lawyers that probably just paid off their mortgages or bought cottages, or are reacquainted themselves with the new staff at their firm, because they've been so tied up in this case for so long, but where do you start wherever your entree is, wherever your lead in you start, you can only start by listening. You know, you can only start by listening. And sometimes, you know, this carefully, because there's the mediator's perspective, my perspective, but we can't work on creating resolutions that break the law. Right. So, so we also have to factor in every letter of every law that applies at this time. So you really can't go rogue and say, all right, you know, let's meet, let's go for dinner. You know, we'll all just go for dinner and this'll be okay.

That would be great. But, but if going for dinner and everything will be okay, means you're going to sign off on something. Well, that's where the lawyers have to be involved. So he really, from what I could tell, he really came out. I had on point of law, he had the legal right to do what he did. You don't have to agree with it. When the laws involved, you don't have to agree with whether it was morally bankrupt or whether it was nasty. It doesn't matter. The law says that that was his right to do he exercises rights under the law. And that ultimately prevails the mediation creates communication. So maybe there's a tiny chance to salvage some of the relationship because there's going to be generations of Roger's descendants that are going to be shareholders invest for the next 10 lifetimes. So if we don't fix it, or at least men, some of the stressors, they're just going to manifest by the generation. We saw that with the Maclean's McCain's rather, do you remember? 20 years ago, the McCain family, the McCain brothers, feuding Wallace and Harrison McCain, and the family's broke apart. They broke apart the business, the one side succeeded tremendously, the other side, not quite as much, you know, they were better together, but sometimes you just get so principled and stubborn. You just can't see it.

Thank

You for sharing that. I'm talking to two part business partners, you know, you each, you know, in the traditional sense, you each bring a strength to the partnership. Sometimes partnerships are, I have a great idea. And somebody else saying I got a big pile of money. I want to invest, but they're both bringing things to the relationship that the other one doesn't have.

Yeah. That's what makes great relationships work. It does. Yeah. And especially, you know, hard test skills that I don't have and vice versa. And you touched on something again. And I think this is a great topic or a great way to kind of close this episode out is there's two things that are involved when it comes to mediation or disputes or resolution at the end of the day. And that's what we're talking about. Right. We're talking about coming to an agreement of some sort, like you said, bringing to people who are further apart or more than two people and bringing them close as close as you can, because maybe they're never going to meet, you know, IDI, but they're going to get closer. And I think that's ultimately it, but there's two things that stake here, a there's money, like you said, there's the assets.

So all the monetary stuff or all the tangible materialistic stuff, but then there's something even more important, which is a relationships. And those are the things that I think people need to take a look at even further when it comes to disputes and mediation, because we're talking about lifelong relationships, we're talking about generational relationships, right? If hard, just kids, my kids, it's hard. And I had dispute, I hate it for our kids not to be able to get along because I want our bloodline to continue in those relationships to continue for their sake. So that's something to pay attention to if you're listening out there. And if you're hearing this and you're hearing Phil in terms of what he's talking about is to keep in mind that it's more than just money in the materialism. It's the relationships. And that's worth more than the money itself.

Great point. Purdeep because the money's replaceable, the money comes and goes, as people will say, but the relationships are when they go, they don't usually come back. You gotta fight. You gotta fight to preserve them and family businesses and partnerships. And in any kind of a state disputes, you've got to fight for those relationships. That's the real victory.

And that's a great way to close out, fill that. So for those of you out there, if you're listing, if you are having challenges or want to prevent challenges, I highly recommend you reach out to fail. So Phil, where can people find you? Is there a website? Is there an email that people can reach out to you at?

Yeah. My website is a transitions group dots TA just as it spell transitions group.ca. And unlike the easiest guy in the world define on

Online, I'm not hard to find and if they can't find me, they can find you and you can redirect them. Right? Yeah, absolutely. Definitely. So, Phil, I want to thank you for being on the show. Thank you, Phyllis pleasure, having you. Thank you, John. Ron was great. Great to do this and we'll definitely have you back on again. I'm sure because there's a lot of stuff, a lot of questions still hanging that I have for you. So thank you for joining us for those of you out there. Listening. Thank you for tuning in and we can't wait till next time. Take care. So yeah. Thanks guys.