When it comes to family business succession, will dysfunction prevail? Eva Fischer was the chair of the family business, Brunata, one of Scandinavia’s largest clean-tech companies, and at the helm during its turnaround. Eva talks candidly with host Laurie Barkman about how the business consumed the family, and caused relationships to become dysfunctional.
Family problems became company problems and there was a negative spiral. Eva was a dark horse in a succession process that eventually led to the sale of the 450+ employee business to a strategic buyer in Germany. Now as a family business advisor and speaker, Eva serves on the board of Family Business Network Denmark, and promotes openness about succession.
There are better paths you can take by having strong communications, succession planning, and good governance. Enjoy this Succession Stories episode about how sibling rivalry disrupted the succession of a family business with Eva Fischer.
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TRANSCRIPT
Laurie Barkman:
Eva Fischer, welcome to Succession Stories all the way from Denmark, I’m so excited to speak with you today.
Eva Fischer:
Thank you, and the same to I’m also excited to do this podcast.
Laurie Barkman:
As I told you, I spent a wonderful six months in Denmark when I was in college, and I have a very big fondness for Denmark. Your story is going to be a very interesting one, not only because there’s an international element, but because you’re going to be sharing some things from an honesty standpoint that maybe we don’t always hear about family businesses, and we’re gonna get to a point of authenticity that I appreciate, so right up front, I wanted to say thank you for that, because so many people come on and say, “Oh, Everything’s been great.” You share the real story, s let’s dive in. Tell us about you. How did you get your beginnings with your family business?
Eva Fischer:
Back in the very beginning, the family business came into our family in 65 when my dad started working there so he like adopted the company as an extra child so we grew up with it but I am basically educated as a sailmaker and I have been living in Norway since I took that education at my own sail loft, and I was never going to work in the family business, but during the years, I found out that life would maybe be easier or better if I joined the family business instead of being a sailmaker.
Laurie Barkman:
A sailmaker meaning these are big sailboats?
Eva Fischer:
Yeah, I may sail for the sailboats.
Laurie Barkman:
You don’t meet people very often who are sailmakers. This is a craft. This is a skill that you needed to learn, right?
Eva Fischer:
Yeah, it was learning by doing or an education but you’re working most when you’re taking a vacation and only have a few weeks in school and I moved to Norway because no sailmakers in Denmark wanted to hire women or female pupils.
Laurie Barkman:
Amazing, and this was in the 70s or 80s
Eva Fischer:
87.
Laurie Barkman:
Okay. Wow, 87 Denmark. Much more liberal now, but that would never happen. Correct? I would think.
Eva Fischer:
No, thought actually back then that Denmark was quite liberal but not in this case. Norway was far more and Norway is still far more liberal than Denmark.
Laurie Barkman:
Your family’s business you had chosen not to go and what were they doing?
Eva Fischer:
We have a company called Brunata which is doing heat cost allocation, and selling heat cost meters and also develop heat cost meters. It’s a European system mostly. In Denmark, there has been a law saying that all places where you share a common heat source, you have to measure how much heat you use so you will have a focus on getting the use of the heat down, because then you can save some money and also you can save the environment.
Laurie Barkman:
Tell us about the family situation. Your father acquired the company, and there’s yourself and siblings?
Eva Fischer:
Yeah, when I started working there, all my siblings were involved and my dad was still involved. It was in 2007, approximately.
Laurie Barkman:
Okay, so the birth order I think is important here.
Eva Fischer:
The eldest is a boy, then it’s me, a girl, and number three is a boy, and number four is a girl.
Laurie Barkman:
Okay, so you were the odd person out you were the only one that wasn’t in the business.
Eva Fischer:
Yeah, but my youngest brother, he had been in the business since he left school and my sister has taken some education beside and also my big brother. He was out educating himself as an engineer working in other places.
Laurie Barkman:
Gotcha. We’ve set the stage so now we in the 90s. You’rea sailmaker, you’re in Norway, you have some siblings in the company. Your dad’s the CEO and he’s running it, how are things going? What’s happening?
Eva Fischer:
That moment, it’s still a very popular member of our Sunday dinner and it’s a good company and we’re very proud of it. It’s in our heart and my dad succeeds to buy it in 90, 91 and at the same time, we also did some succession. Me and my siblings got 15% shares each and suddenly became owners, which is a next level and you can always–often I think you can see that when you get the shares, you also feel like you have some more power or some more to say, or some more to demand and I think no one was prepared for that because it was just a guess from my dad, who thought, “Okay, it would be nice that my kids will be more involved in some kind of way.”
Laurie Barkman:
There was no conversation, did he sit you all down and explain this as equity in the business? “These are my expectations for you.” When you said succession, what does that entail? You meant maybe the ownership succession as opposed to leadership succession?
Eva Fischer:
Yeah, about succession is just that we get that we get 15% shares each.
Laurie Barkman:
Okay, so more from a maybe an estate planning side of things. He was willing upfront to gift percentages to all of you, but you all had an equal share.
Eva Fischer:
We all had an equal share.
Laurie Barkman:
Equal shares, the siblings. Okay, so he’s running the company, you have an equal share and he’s got the majority vote.He’s in good health running the company. Is the company in good health? Does it stay in good health?
Eva Fischer:
Yeah, the company is at that moment in good health, My dad, he was not very, very focused on making a lot of money. He was very focused on having fair heat cost allocations to the inhabitants so he was very focused on having very accurate meters made and then there should be just a minor plus on the bottom line every year, and the money was re-invested in the company and so yeah, very good, healthy company, but also, like, on the line of, you shouldn’t do many foods where it’s tipping over, because the bottom line is not very high.
Laurie Barkman:
There wasn’t a lot of growth, it just sort of stable business now with a stable business and then at what point did you decide to enter? What were the circumstances?
Eva Fischer:
When I started, when I decided to enter the company, already, my siblings, as I said, were working there, I was working at the sailmaker, I had my own business, I had two small kids. The sailing business changed into that sails were made in the Far East so we couldn’t compete with the salary and the prices was really going down on the sails so it was very hard to make ends meet at the end of every month and then I found out that if I went into the family business, maybe I could work a little less, and at least have a salary where I knew what I had every month and what I could expect. It was not because I have these and the skills I went to into the business. It was more like I could have an easier life and I could see that my siblings were there and they had higher salaries than I could make.
Laurie Barkman:
What was the dynamic when you came in? Were they excited to welcome you in or was there resistance?
Eva Fischer:
At that moment, I asked my dad, I said, “I am thinking about closing down the sail business and joining the company and what do you think about that?” “Yeah, that would be a good idea.” I asked him, “What do you want me to do?” and he said, “You can choose,” so I chose to be in the Norwegian sales and service company that we have. It was a very small, tiny organization, only five people working there and I became the manager but because it was so small, I also did all the things that we were doing; selling the meters, mounting the meters, doing the heat cost dedication and it fit me well to do that because it was really close to being a sailmaker. Because you’re working on the floor. At that moment, it was okay but quite forced, I found that we that we had some issues with the meters and they were not totally wrong, but they didn’t send it, there was a radio sender in and they didn’t send so we didn’t get the measurements so we had to go out manual to read them and then we had to change them and the new meters we put in were also having some issues so I contacted the headquarters in Denmark, where my siblings were and where my big brother was, had become the CEO and I was trying to point out the issues that we had. At that moment, I think that he felt like, then I was a little sister. How should I know? And I was just the sail maker and I was annoying, asking for…pointing out that we have some issues, we have to correct them so we started having some heavier arguments more as siblings than as colleagues, and it was definitely not constructive.
Laurie Barkman:
Was it contained to the two of you? Or did your dad get pulled in? Did your other family members get pulled in? Or was it just between you and your brother?
Eva Fischer:
It was between me and my brother.
Laurie Barkman:
Was he technically your boss?
Eva Fischer:
He was technically my boss, yeah.
Laurie Barkman:
He didn’t want to hear this bad news. He didn’t believe that message he was shooting the messenger. What happened after that?
Eva Fischer:
We continue the discussions and I continued calling people in the headquarters so when I couldn’t disturb him, I could disturb others about the issues and at the moment because we didn’t have any rules about how we were working together and we didn’t have the governance about okay, he is technically my boss, but if I know all the other people I can call, then I just did that. I think that that also disrupts the company. It doesn’t only disturb the relationship between me and my brother or me as a manager in Norway, and he is the CEO, it also disturbs the company in general.
Laurie Barkman:
They can see it, they can see the tension, they can feel the tension building and I know that’s a very uncomfortable place to be. How did you get through that tough time? What did end up happening? Were you able to push through? Or did one of you want to capitulate?
Eva Fischer:
I ended it because it became too hard and also, I didn’t want to put my name on things which were not working. I was never thinking about selling my share or anything but I decided to stop working there. Accidentally, at that moment, my dad also knew that we had issues, me and my brother, but the day when I went to Denmark to deliver my resignation or to deliver what I was working with two other people to take it over, my dad set asked my brother to leave.
Laurie Barkman:
Wow, he asked him to leave?
Eva Fischer:
It was coming like lightning from a clear sky. We were not expecting that.
Laurie Barkman:
What a shock and your brother was probably angry and devastated and mad at you blaming you, right?
Eva Fischer:
Yeah, I think that he saw that I was coming there because I knew that this was going to happen because I was there that specific day but also, it became a very stressful situation. Of course, suddenly, we had like a company with 450 employees and lots of customers and no manager and I was in Denmark. I had my last day of work, I was going to Denmark, and I was going to go back to Norway to be with my kids and my husband and start a new life and I just called my husband to say sorry, “I don’t know when I’ll arrive back in Norway, because we have an issue here.”
Laurie Barkman:
What was your father asking you to do? Was he asking you to step in as CEO?
Eva Fischer:
No, no, what we actually did was we had one person who had been working in the company for many, many years, who was also in management and we asked him to be the CEO until we found the CEO that we want to continue with so he stepped in. Then the three siblings, me and my two little sisters, and a brother and my dad, and the CEO, we started finding out what is the situation? How does the company look like? How are the financials? How is everything going? Of course, also started informing the board and the employees and the bank and the customers and everything which you need to do in that situation and sometimes I use short stories just to describe how extremely stressful it was because I was in Denmark and I was not supposed to stay there but I had to stay because of the situation.
My son, who was at that moment, 10 years old, he had a riding lesson. I think big two or something like that in Norway and I was just like, “I have to go. I have to go to Norway, I have to follow him to the riding lesson,” and it was like I took the last train to the airport and took the very early plane in the morning, went to our house followed him to the riding lesson to come back and flew back to Denmark and it was totally crazy. Maybe he could have dropped that lesson. I could have asked one of the people to take him there but it was like, everything was just every thought and every plan and every action was just put in a basket and everything was important. Family was important. My kids were important and the company and you just have to pick, okay, on this on this note, it says, okay, I have to do this.
Laurie Barkman:
You definitely were compartmentalizing, because there was a lot of stress and there was a lot of pulls on your time, no doubt, geography, family, and then the situation with your father and your brother. Did your father have a succession plan in mind? Should your brother retire there? Was he already planning that this internal manager would be a successor, or this was truly an emergency situation?
Eva Fischer:
It was truly an emergency situation. We didn’t have any plans.
Laurie Barkman:
Okay, and then when you had mentioned to me offline, that bringing in an outside CEO was also the opportunity to professionalize the office, professionalize the role. It sounds like the financials were also in a bit of turmoil. At this time that the business was in a bit of a crisis, did you end up staying to help turn it around? What ended up happening?
Eva Fischer:
Yeah, I stayed, or I traveled back and forwards to Norway, so I could take my son to the riding lessons. I started going back and forwards to Denmark, o my sail lodr in my house or just beside my house so I was normally always there one day to the other, just not there four days a week snd I became a part of the management group snd I was a part of the board and I was the deputy chairman of the board snd after this happened in May 2011 and November, we hired the first external CEO and he stayed for two years. In that period of time, we were starting to turn around, we will start doing fixing the meters, also the financial. Actually, we had the sales and service company in China and I found out that they were absolutely not making any money. It was just a big minus and I became very angry about that, because I always pushed about Norway, “Why don’t we do it bette?”r and stuff like that and then so we had this tiny little place so far away, which was just taking out money from the company so they said I go to China, find out how we can solve this issue down here, and so I went there, and I wentt three times and I quite fast decided that we can’t continue here so we handed it over to the manager, he took over the company, so it was his and so then we could focus on the sales and service companies, which were in Europe and not far away.
Laurie Barkman:
If we fast-forward forward a little bit to the company selling, how did the family decide to sell the business? What was the dynamic there?
Eva Fischer:
We were doing this, I’ll just go a little back even though you want to have me a little faster forward. In 2013, we professionalized the board, because at that moment, we had a family board, it was the same family members sitting in the board and also in the management group so I left the management group and together with my dad, we had three external members of the board, I and my siblings left the board and I think that’s very important to mention, because then, at that moment, it also became more easy to be the CEO so you didn’t have the same people managing you that you have to manage. I think that’s a dead end and then in 2015, we came up with a quite big minus. Due to that we have been fixing a lot of things but the bank didn’t like that and they said, “Okay, then we take part in new shares so that you can do nothing with the shares so we can like handcuff you due to how you’re working and my siblings, my two youngest younger siblings became a little afraid that if we didn’t succeed, then maybe we had to leave our homes also, because it was privately owned shares and for that reason, we decided to go into a selling process.
Laurie Barkman:
In US dollars, approximately how big was the company at that time?
Eva Fischer:
We were having revenue of approximately 40 million.
Laurie Barkman:
It’s a very big company, and you put it on the market. Talk about the process of selling was that? Was that a difficult process? Because of the family dynamic? Or were people in agreement on the buyer?
Eva Fischer:
I think the selling process in itself was not difficult. It was quite, I found it very life-giving and if you can say funny learning. We spent two and a half years in the selling process where we also finalized the turnaround. My siblings stopped working in the company in 2015, when we took the decision, and I became the Chair, and my dad, together with another one became the deputy chairman so I was responsible for the sale of the company and, we started the process ‘15 But we didn’t put it to sleep till ‘18 so no one kone knew no one. No one knew that we were going to sell the company.
Laurie Barkman:
Okay. And who eventually found a strategic buyer a pretty significant player in Europe, correct?
Eva Fischer:
Yeah he had been working with us back before the 90s. He had been a customer of Brunata in Germany, but a very wealthy family and dealing with exactly the same way that Brunata is doing in Germany.
Laurie Barkman:
A privately held company in Germany bought that, that’s a good story since the family business and you remained on the board, or did you retire from the board when the deal went through?
Eva Fischer:
When the deal went through, I was one year in the board, but then suddenly Brunata was the sales and service company to that company in Germany so we didn’t have any board meetings or anything like that.
Laurie Barkman:
Gotcha. If you could go back in time and give yourself a message at the roughest point, whatever the lowest point was, when would that lowest point be, and what would you say to yourself?
Eva Fischer:
I think that I can say to myself, but I think basically, if we had been more professional, more structural or more governed and had more governance in the company at the moment then I think we would also have succeeded in having more meetings, which would be where we could achieve something instead of having meetings arguing so it would have been better for the company.
Laurie Barkman:
Yeah. When do you think family businesses should start transition planning to choose the right successor for the ownership? Very early? What does that mean? 10 years, 20 years?
Eva Fischer:
I think already, when you take over the company, you have to start thinking about how will you prepare it for the future and I think also, it’s very, very important that we could, because we were a family of four siblings, who all of us had a lot of knowledge about the company and when you put in the successor, the one who is taking the lead, sometimes you can have the problem that this person will be feeling that he is the chosen one so this is less clever than me and I think it’s very important that you put it up to say that actually everybody has some great knowledge about the company. So if we could work together on finding ideas on new markets, new developments and stuff like that, we could be quite good and working together. But I think very often happens that one has to lead and the other is put aside. And then you will have this fight in all this ego of being hurt with where no one is listening to you.
Laurie Barkman:
There’s a show in the United States called Succession which just finished its final season. I don’t know if you’ve watched it or you know about it and they made a lot of wrong choices. The family made a lot of wrong choices on that show when it came to succession, which is obviously entertaining and part of the story. What do you think would prevent a family from making wrong choices when it comes to succession?
Eva Fischer:
I think basically communication, agreements, if you work in the company, contracts which are showing you what you what you need to achieve in terms of KPIs and stuff like that so you know when you have success. I think also this forum where you can have the family owners meeting every month, every second once every half year, depending on how much you need, where you have an agenda and where you meet, and you can discuss and ask questions and that’s where you discuss the family business, you take it out of the Sunday dinner, don’t discuss the company back home, but for different reasons. One of the most important is that the one who is working in the company will often feel like he’s on 24/7 The family feels that they have the right to ask questions whenever they want and you will never know what answers to what questions to get so you will never be prepared but on the other hand, I also think it’s very important to have these family members who are not in in the company, have a place where they can ask the questions where they can give ideas to change of the company or to market potential sources, stuff like that. But I think it has to be a place where you This is what you’re discussing and it’s planned. And there’s an agenda and a facilitator facilitator and in sometimes could be, could be quite valuable.
Laurie Barkman:
Tell me about today, the present day. What’s the relationship with your brother?
Eva Fischer:
We just didn’t see each other but the rest of the family and also, the grandkids are having a good relationship. Luckily, I think, when I started telling about our issues, I decided that because I went to the stage in ‘14, which was in the middle of our turnaround, and I was speaking about the issues that we had had, and it was a place where everybody could speak, it was family business network meeting and everybody was supposed to speak quite openly and it was about succession but most of them were telling about the good stories where everything went well and I could feel when I went to the stage after listening to this, that I became smaller and smaller when I came to the stage and I was going to say, “Okay, it’s only us, we can’t do this. We are a sick family.” I mean, and then when I finalized my speech, and I came and met people after one lady came to me and said, “Thank you so much, because you’re sharing. I mean, your brother looks like my brother, but my brother committed suicide,” and I was really shocked and for the rest of the day, I heard stories from family businesses, really sad stories. and I think that fat basically, in my heart, I believe that family business is fantastic. I mean, they have so much to give, and they have long-term, strategic decisions, they do philanthropy, they often go into the community where they’re located, and try to build it for good so I think they have so much to give, and it’s so sad that you have this. On the side, there’s a war between family members, which could be wisdom, structure, or wisdom. Humbleness to each other. Also as I said before we started the recording if we as siblings could have been better to speak on each other’s competencies, instead of focusing on the competencies that we didn’t have, then we would have been a fantastic management group and we would still have owned the company. I’m quite sure about that.
Laurie Barkman:
Well, it’s hard. We can’t really go back in time but that sounds like the main reason why you’re working with family businesses now as an advisor, tell me a little bit about that.
Eva Fischer:
That’s exactly the point why I’m doing it. I think it’s important and I think also it’s very given to me, family businesses and family owning them because they have a lot of proudness of the company they own and they there’s so much they want to achieve and some of them so frustrated because they can’t be listened to. They can’t be heard so I think trying to focus on how can we change the fundament of being a proud family owning a company which they’re proud of. At the same time, they can have very nice Sunday dinners, celebrate birthdays, and having nice family meetings together.
Laurie Barkman:
Well, Succession Stories are not always happy endings. There are some elements of really positive things in your story and then there’s obviously the relationship with your brother, which maybe one day you never know can be repaired so I like how you’ve balanced your perspective on on that and that you’re guiding other family businesses to find find a good place. If people want to get in touch with you, Eva, what’s a good way to find you?
Eva Fischer:
I have a homepage which is evafischer.dk where I have all my articles and stuff like that and of course, they will find the telephone number and LinkedIn.
Laurie Barkman:
And all those good things. We’ll put a link to the website in the show notes for sure. I love to ask everyone if they have a favorite quote, something that inspires you, and given your story and we talked a little bit off air, I know you have one, what is yours?
Eva Fischer:
Yeah, it was actually what I said before, that if we could be better speaking of our competencies at each other siblings, instead of focusing on what we’re not able to do, or what we don’t have, then we could have been a very good managing group or owner group, and we would still have had the company.
Laurie Barkman:
Number one piece of advice as well as something that you’re holding close. Thank you so much for being on the show with me today and sharing your story. Before I let you go, I would be remiss if I didn’t ask him for your favorite places for people to visit in Scandinavia. What are your top three?
Eva Fischer:
I basically think we have in Norway a ferry that will take you on the coast from Berg which is a totally fantastic thing and then, of course, Copenhagen, which since you were here has developed a lot. It’s a fantastic city and one more I think it might be the mountains in Norway. Go skiing. Nice looking, so beautiful.
Laurie Barkman:
Well, thank you again, Eva. It was great to be with you today. Thanks so much for coming on Succession Stories.
Eva Fischer:
Thank you.
Laurie Barkman:
To the listeners, thank you so much. Be sure to follow Succession Stories on your favorite podcast player or YouTube. To maximize the value of your business and plan for future transition, reach out to me for a complimentary assessment at meetlauriebarkman.com. Join me next time for more insights from transition to transaction. Until then…here’s to your success.
