Playing Happy Families | Brunswick Group
Brunswick Review Issue 1

Playing Happy Families

Family-controlled corporations, overseen by dynastic foundations, face a unique set of communication challenges, notably how to meet stakeholder expectations while respecting family privacy.

In the coming weeks, members of an industrial dynasty will gather at an imposing villa on Via Giacosa in central Turin. The private meeting will consider last year’s financial returns for what is the “royal household” of Italian business: the Agnelli family.

Relatives gathering at the Giovanni Agnelli Foundation, named after the dynasty’s founder, will receive a detailed briefing from the family’s 33-year-old business scion John Elkann. The young engineering graduate will summarise the outlook for a conglomerate spanning cars, commercial vehicles, engineering and agricultural machinery, as well as assets including the newspaper La Stampa, art galleries and Juventus football club. This is Fiat Group, and Mr Elkann, the vice-chairman, will reassure the family that the business is soundly and prudently run. There will be no press conferences, no photographs and no press releases coming out of Via Giacosa.

As long-term advisers to several family dynasties, Brunswick has learned how much these businesses value the balancing-act of maintaining personal privacy while embracing the clear benefits of open communication. For those advising such organisations, three principal challenges dominate the communications agenda.

First, they must avoid creating a pattern of communication that fuels increasing external expectations. Company officials, second, need to communicate enough to enhance understanding, while guaranteeing discretion on personal family matters. And last, they have to focus on business performance, countering the media’s obsession with wealth and lifestyle. All this must be done while distinguishing between a family’s right to privacy and media accusations of secrecy.

Of these challenges, managing media interest in wealth, lifestyle and privacy is in danger of becoming the overriding objective for some families. Clearly, elements of the media are mixing entertainment with news, and today’s celebrity culture means that stories about the wealth and private lives of industrial families are always in demand. As one Fiat insider says: “The US media is fascinated by the family story and the lifestyle issue – a hangover from the Giovanni playboy era.” While many families do not publish their financial numbers, the media does not recognize “non-disclosure” when it comes to individual family members and their lifestyles. A reluctance to talk simply arouses the media even more. Every throw-away statement, or snatched conversation outside a company’s annual meeting, risks becoming headline news.

Given that risk, the “default” position for many families has been to limit their communications and to avoid all media coverage in the belief that it will invariably be personal. This cycle becomes naturally defensive.

The “just-say-no” communications strategy of some families exposes a clear gulf with publicly-quoted companies. The chief executives of many publicly-quoted companies are openly envious of their private counterparts, who do not have to address the daily demands of the media, the capital markets and fund managers – often with widely different interests from those of the company. It should be no surprise that some senior industry figures in listed companies have said they are tempted to take their businesses private, gaining the freedom to take decisions that could be in the greater interest of the company and its shareholders over the long term. 

Unlike unquoted companies, fully-listed corporations must respond to media interest and defend their strategies around each financial statement or trading update. And sometimes they must embark on the trying exercise of negotiating corrections when stories are wrong.

The leaders of unlisted, privately-held businesses can afford to shrug their shoulders at inaccurate or exaggerated reports. They have the easier option of not commenting. As a result, such families simply ignore adverse publicity since they see little point in meeting the day-to-day media challenge head on. The exception, of course, is when there is significant misrepresentation. On those occasions, the lawyers typically become the first recourse in the absence of senior editorial relationships within the media to deliver more accurate coverage or retractions.

Not all families have that luxury. Families with controlling stakes in publicly-listed companies must make some disclosures. Public filings, quarterly earnings and annual meetings require statements, creating a clear corporate interest in accurate reporting and building better relations with a wider group of stakeholders.

Most families that control publicly-listed entities have adapted by recruiting an “extended family” of trusted, loyal, advisers. This small corps of senior bankers, lawyers and communications executives has a daunting task: to protect family privacy while meeting company obligations to outside shareholders and other stakeholders.

In many cases, families have elected non-family chief executives to execute their strategy. Hence Phillipe Dauman, CEO of Viacom, implements the strategy he has developed with Sumner Redstone. Janet Robinson of the New York Times Company asserts that the Sulzberger-controlled publisher will benefit from a “flight to quality” in newspapers. Alan Mullaly, Chief Executive at Ford, argues that family ownership delivers “a consistency of purpose and long term view”.

Behind these executives stands a senior advisory team striving to balance family discretion and shareholder interests. “All these families are trying to adjust to more intrusion,” says one of the banking consigliore. “Media attention clashes with their long term view of the world. Day-to-day coverage of the share price performance is irrelevant to them because they are not going to sell.” They are long-term shareholders in a very real sense and their reaction to short-term media interest reflects that.

But a lack of engagement with the media and others in the market can lead to a vacuum of information that is filled by rumor and speculation. Advisers must find a way to meet some of that demand whilst upholding family privacy. “Maintaining confidentiality and trust is crucial; if they don’t open the kimono you’re finished,” says the managing director at one investment bank specialising in family clients. 

In any family-controlled company, succession is arguably the trickiest issue to communicate. The challenge is different according to whether an external manager is coming in or stepping aside for a family member, or whether the next generation of the family is taking over. “The biggest problems families have are over succession, who to pick and how to placate other members of the clan,” says one banker close to a number of European dynasties.

Media interest can make an elegant handover difficult, as shown when Alex Trotman stepped down as chairman and chief executive of Ford Motor Company, splitting the roles between Bill Ford and Jac Nasser respectively. The same was true when Tony Ball made way for James Murdoch at BSkyB. Paolo Fresco at Fiat stood down when John Elkann was deemed experienced enough. 

Different families have different methods of preparing for the next generation of leaders. The key priority for tomorrow’s leaders is to “learn the ropes” of the business and the wider context in which it operates. While they are gaining that experience, the demands of media, investor and government relations can be handled by other members of the management team and professional advisers. 

A requirement for total immersion in the business means that future leaders of family businesses often face long incubation periods, in which they learn every aspect of their organizations. Jacob Wallenberg, now chairman of Investor AB – the family controlled Swedish holding company – worked at JP Morgan before joining SEB, the bank with deep ties to the Wallenbergs. James Murdoch, now chairman of News Corp International, was schooled at Star TV in Asia. 

In Europe, Christoph Mohn of the Bertelsmann clan worked at Lycos before joining the “firm”. At Fiat, John Elkann worked secretly at a number of different businesses – including a stint at a components plant near Birmingham, where he rented a room from a union official who had no idea that his lodger was heir apparent to the Agnelli dynasty. 

This slow introduction is designed to prepare the family scions for the pressures ahead. In a recent interview, Jacob Wallenberg described the induction in graphic terms. “It’s like cooking a frog,” he said. “You put the frog in cold water and you turn up the temperature. You don’t realise that you’re being boiled until it’s too late.”

Neverthless, younger family members directly engaged with management, such as the Murdochs or the Mittals, have enthusiastically adopted best practice communications. The new generation tends to be less distracted by personal or wealth related issues, focusing instead on effective engagement in media, investor and regulatory relations. These individuals have grown up in the new media and capital markets world, and find it easier to ensure that company matters remain the core priority.

The benefits of that strategy is evident at Thomson Reuters, the electronic information and publishing powerhouse. There, Lord Thomson, the media mogul who created the Woodbridge investment vehicle, married long-term family principles to the interests of the Thomson companies they managed. That vision was continued by Geoff Beattie, the current Woodbridge chief executive, when Thomson Corporation approached Reuters in 2007 with a takeover proposal. It was partly those principles that convinced the Reuters Trustees that Thomson would be a suitable owner of the iconic Reuters Group. 

Beattie, part of the professional management cadre now running family companies, has embraced Lord Thomson’s mantra that family interests should match those of outside or small shareholders: both benefit from long term growth in shareholder value. 

Similar values and long term principles no doubt influenced the Tata family’s decision last year to acquire both Corus and Jaguar Land Rover in the UK.

In the current economic maelstrom, such strategies will come in for intense media scrutiny. A stable capital base and longer term view of the world gives family investors a degree of security rarely enjoyed by public companies. But family businesses long ago recognised the difference between security and complacency. And today, the best have adopted communication strategies that take nothing for granted.  


Family companies sometimes view communications a bit like home insurance: important to have but ideally not to be called upon.

Communications executives working for partially-listed family-controlled companies, though, face a particular challenge: how to comply with their obligations to make market announcements while avoiding discussion of the personal issues in which many reporters are most interested. The problem is particularly acute at businesses where the family patriarch has celebrity status.

The dilemma of how to provide helpful information without compromising the family preference for personal privacy requires careful handling. A communications checklist, compiled from the recommendations of bankers, chiefs of staff, non-executive board members and our own experience as advisers, includes:

  • Detailed and clear materials on family shareholdings for distribution to media
  • History of family ownership, to form part of an ‘education pack’ for external audiences
  • An ability to explain, coherently, different classes of shares and particularly different voting rights
  • Avoidance of trusts or family companies named after family keepsakes, such as farms, boats or long-deceased relatives
  • Eloquent chief operating officers or presidents, hired from outside the family circle, to demonstrate a commitment to day-to-day business
  • A senior independent board member to police succession; someone able to engage with external stakeholders
  • A willingness to accept that media interest is a price that has to be paid for business ascendancy.

“Most mature families know that intrusion is on the increase," says one long-standing family banker. “The focus in the media is moving to the news pages. The communications challenge is to keep them in the business section.”

Tim Burt is a Partner in Brunswick's London office. He worked previously at the Financial Times where he held several senior editorial roles, including Media Editor, Motor Industry Editor and Nordic Bureau Chief.