Clockwise from back row, left: Louis Jacobs, Jerry Jacobs, Jeremy Jacobs, Charlie Jacobs Emphasis on teamwork The Jacobs family is putting governance structures in place as they transition to third-generation leadership at their sprawling hospitality enterprise, Delaware North. PLUS • Talking to your kids about wealth • The problem with estate restrictive covenants • Peter Paul Electronics builds for the future fb010214_Cover 12-16 bs.indd 2 12/18/14 3:41 PM STRONG LEADERSHIP. ENGAGED OWNERSHIP. ALIGNED FAMILY. BUILDING A FOUNDATION FOR THE FUTURE. Family enterprises see enhanced results in both business performance and family relationships when they master the following: • Group decision making processes, • Clear understanding of roles and responsibilities, • Proactive management of individual expectations, including around growth, risk, liquidity and profitability, and • Strong communication among shareholders. This foundation frees leadership to focus on strategy and success, and creates accountability to ensure that the family’s vision is achieved. For twenty years, The Family Business Consulting Group has helped business owning families plan for long-term success. From next generation leadership development to governance and ownership issues, our consultants provide critical insights, advice and facilitation. To speak with Drew Mendoza, Managing Principal, Helping family businesses prosper across generations.® call (773) 604-5005 or email [email protected]. There is absolutely no obligation. C THE FAMILY BUSINES S CONSULTING GROUP, INC. and FBCG are registered trademark s O P N U and the FBCG logo is a trademark , of The Family Business Consulting Group, Inc. SU RO LTING G www.thefbcg.com FBCG_091014.indd 2 8/29/14 10:27 AM FROM THE EDITOR A kid’s view of wealth n this issue’s Toolbox column, I review a book entitled The Voice of the Rising Generation: Family Wealth and Wisdom, by James J. Hughes Jr., Susan E. Massenzio and Keith Whitaker. The authors, who are advisers to high-net-worth families, point out that many people who grew up in business Ifamilies feel stifled by their ancestors’ success. Too many of these heirs, feeling stuck in the shadow of an illustrious business founder, attempt to relieve the pressure by unhealthy means, including overspending and substance abuse. How do parents prevent this from happening to their kids? One preventive measure involves having frequent, open and wide-ranging conversations about values, work, entrepreneurship, legacy and wealth. Starting the discussions early helps the younger generation develop a healthy attitude toward money, experts say. An article in this issue by Jeff Savlov, a family business/family wealth adviser trained as a therapist and psychoanalyst, explains that even elementary-school kids are able to participate in meaningful conversations on these topics. And by the time they reach middle school, your children have insights to share that may inspire you to rethink your approach to work and home life. The Openers section in this edition features an interview with Scenic Root, a perceptive young lady who at age 13 is an old hand at having frank conversations about the advantages and disadvantages of growing up with wealth. Scenic—a fifth-generation descendant of C.J. Root, whose company created the original Coca-Cola bottle—has been talking about business and family challenges with her father, Preston, since she was a small child. Scenic said during our interview that the best gift that family members can give to each other is not a material possession, but time spent together. “You’re never going to get that time back if you waste it all,” she told me. In recent study by Merrill Lynch’s Private Banking & Investment Group, 39% of respondents asserted that it’s never too early to begin talking to children about responsible financial behavior, and 11% said these discussions should begin when the kids are ages ten to 13. Yet only 14% of these study participants said they actually raised the issue when their children were nine or younger. Twenty-seven percent said they waited until the kids were ages 18 to 24, and 21% said they procrastinated until their children were 25, or even older (see FB, July/August 2014). Whether you broach these subjects with your kids or you don’t, they are watching family members’ relationship to money, to the business and to the family legacy, and their future habits will be based in large part on these observations. Opening a dialogue with them is likely to be a revelatory experience. Barbara Spector [email protected] PHOTO: RICHARD WUEST www.familybusinessmagazine.com 1 fb010215_EditorsNote 12-16 bs.indd 1 12/18/14 3:03 PM CONTENTS JANUARY/FEBRUARY 2015 VOL. 26, NO. 1 48 Peter Paul and legacy The Mangiafico family faced challenges on several fronts as the time neared for generational transition at their company, Peter Paul Electronics Co. With the help of advisers, the family built a foundation for the future of their business. — Margaret Steen COVER STORY 52 Simply sustainable 42 Emphasis on teamwork The second-generation leaders of wholesale distributor Hill & Markes run their business with The Jacobs family is putting governance structures an eye on taking care of the environment—and in place as they transition to third-generation leadership developing a third-generation leader. — Ilene Schneider at their $3 billion hospitality service enterprise, Delaware North. — Dave Donelson Contents continues on page 4 2 Family Business • January/February 2015 COVER PHOTO: JOE CASCIO PHOTOGRAPHY fb010215_Contents 12-17 bs.indd 2 12/19/14 10:21 AM B:8.75” T:8.5” S:7.5” B:11.125” T:10.875” S:9.875” YOUR VISION. OUR GUIDANCE. THEIR FUTURE. Few things motivate you more than being there for your loved ones. At Hawthorn, PNC Family Wealth®, we offer highly personalized and seasoned wealth management advice to help ultra-affl uent families and individuals achieve their aspirations. As one of the nation’s top-ranked and largest multi-family offi ces, we have the experience and resources to design and implement a sophisticated investment strategy that aligns with your unique fi nancial, tax, estate-planning and philanthropic goals. Our long history, in addition to the confi dence placed in us by our clients, is an affi rmation of our ability to sustain your legacy for generations to come. To learn more, call Dick Barton, Managing Director, at 888.947.3762 or visit hawthorn.pnc.com WEALTH FIDUCIARY INVESTMENT PRIVATE HAWTHORN ASSET CUSTODY PERSONAL STRATEGY SERVICES MANAGEMENT BANKING INSTITUTE & ACCOUNTING ADMINISTRATIVE & CONSULTING SUPPORT SERVICES The PNC Financial Services Group, Inc. (“PNC”) uses the name Hawthorn, PNC Family Wealth® (“Hawthorn”) to provide investment consulting and wealth management, fi duciary services, FDIC-insured banking products and services and lending of funds through its subsidiary, PNC Bank, National Association, which is a Member FDIC, and uses the name Hawthorn, PNC Family Wealth® to provide certain fi duciary and agency services through its subsidiary, PNC Delaware Trust Company. Hawthorn and PNC do not provide legal or accounting advice and neither provides tax advice in the absence of a specifi c written engagement for Hawthorn to do so. “Hawthorn, PNC Family Wealth” is a registered trademark of The PNC Financial Services Group, Inc. Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value. © 2014 The PNC Financial Services Group, Inc. All rights reserved. Hawthorne_111214.indd 2 10/27/14 11:16 AM FILE PRINTED AT: None of Actual Size JOB#: PNC_BRD_M49001 CLIENT: PNC BANK PROJ. MGR: Renee Coletrane AE: Margaux LeBuffe SCALE: 1” = 1” SAP#: 10189001-1040-A0 AD TITLE: Hawthorn 2 Girls Standard PROD: Victoria Gonzalez AD: Soo Baik BLEED: 8.75” x 11.125” 8.75” x 11.125” WORK ORDER #: 61986-2.6 PUB: N/A DATE CREATED: 2-19-2014 3:01 PM TRIM: 8.5” x 10.875” 8.5” x 10.875” FILE NAME: PNC_BRD_M49001_A1.R6.indd PUBDATE: N/A DATE MODIFIED: 6-27-2014 12:00 PM CW: N/A 1 2 SAFETY: 7.5” x 9.875” 7.5” x 9.875” TOOLKIT #: N/A OUTPUT FINAL AT: 100% ARTIST: donald.bow FILE PATH: Production:Volumes:Production:PNC:Mechanicals:Hawthorn:PNC_BRD_M49001:PNC_BRD_M49001_A1.R6.indd FONT FAMILY: Times (Regular), DIN (Regular, Bold, Light), Rotis Semi Serif (65 Bold, 55) COLORS: IMAGES: Y48770-PC-1.eps (307 ppi; CMYK; Art:PNC:Images:Y48770-PC-1.eps; 16.2MB), Y37841-A-1.ai (Art:PNC:Images:Y37841-A-1.ai; 1.5MB) Mechanical QC Release QC FIRST PRINT 100% COLORS/SWATCHES SAVED TO PRODUCTION PRINT 100% ADDITIONAL PRINTS IMAGES LINKED TO ART CORRECT FONTS CORRECT FILE NAME/ROUND QC: FLIGHTCHECK w/REPORT PRINT CONTENTS CONTINUED 8 12 38 DEPARTMENTS 55 1 From the Editor A kid’s view of wealth. — Barbara Spector 6 Publisher’s Page Lessons learned. — Caro U. Rock 8 Openers A young fifth-generation member of the Root family shares her viewpoint on family and business. — Barbara Spector 12 At the Helm Dick Yuengling, CEO, D.G. Yuengling & Son, Pottsville, Pa. — Patricia Olsen 38 Conference Report Transitions West 2014 attendees were encouraged to celebrate their companies’ legacy while planning for the future. 55 Toolbox Reviews of The Voice of the Rising Generation and 72 It’s More Than Money. — Barbara Spector 57 Directory Advisers for family companies. 72 Profile Dublin Cleaners. — Sally M. Snell ADVISERS FORUM 14 Mariana Martinez Berlanga and Peter M. Bloom: Estate constraints, incentive trusts and restrictive gifts often do not work as planned. 20 Greg McCann: Innovation, awareness and practice will help equip your family for success in today’s world. 26 Jeff Savlov: Don’t miss out on early opportunities to talk to your kids about the family’s business and assets. 4 Family Business • January/February 2015 fb010215_Contents 12-17 bs.indd 4 12/19/14 10:20 AM Your brother, your sister, your parents, your children, your business advisor.