Lebanese American University


Reconciling business with family

The Institute of Family and Entrepreneurial Business uses case study to tackle recurrent issues in family businesses.

The questions and issues tackled through the study of the fictional case gave way to engaging discussions among participants.

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The Institute of Family and Entrepreneurial Business organized a roundtable discussion that explored and perused a case entitled “The Crowne Inn: A classic case of a family business in turmoil” on June 26.

The event was attended by various members of the institute’s Family Business Leaders Network, the first network in the Middle East that allows young family business leaders to converge in order to discuss issues related to the proper functioning of family businesses.

“Our main goal here is to better acquaint the participants with common problems and challenges that are encountered in family businesses, while trying to come up with creative solutions to these conundrums,” says director of the institute Dr. Josiane Fahed-Sreih, moderator of the event.

The discussed case revolved around a family owned bar, The Crowne Inn, originally founded by the fictional Harvey Johnston.

After Johnston’s retirement, the second of his four sons, Bruce, agreed to take over the management of the bar, while orally consenting to cover his parents’ second mortgage, as well as their health insurance and medical bills for the rest of their lives. Bruce, however, fails to live up to this agreement with his parents.

After considering different legal options, the main issue, according to Fahed-Sreih, remains the absence of any written succession plan originally; which would make it more difficult for Bruce to be held accountable for breaking his side of the deal.

Another evident problem is the valuation of the business, she adds - who is legally allowed to determine the monetary worth of this, or any given, business?

The questions and issues tackled through the study of the fictional case gave way to engaging discussions among participants.

According to Mira Frem-Frenn, member of the Family Business Leaders Network and second-generation member of the family owned INDEVCO Group, The Crowne Inn is a prime example of how there are hidden problems in every family business.

“Agreements, in terms of shares and numbers, may seem fair, but once you delve deeply into family issues, the equality is not always justified,” says Frem-Frenn as other participants agreed.

Another aim of the roundtable discussion is to create networking opportunities, chiefly among second-generation members of family businesses, along with helping the participants to liaise with other members of family businesses, in order to learn about different practices.

“Sharing opinions, regardless of how controversial they are, takes us temporarily out of our day-to-day thinking,” says Johnny Chalhoub, general manager of Chalhoub Pharmaceuticals s.a.l and Cesar Chalhoub et fils s.a.l., who regularly attends IFEB’s roundtables.

“The discussions are useful as they help us find solutions to problems we think are unique; and the divers profiles of the participants give us the advantage of a wider and more comprehensive view of these solutions,” he adds.



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