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Posting by: Geoff Brown
Date: September 9, 2009
In our Greater Washington DC Family Business Alliance, we often discuss the trials and tribulations of working with family in your business. Every now and then, however, these families start or join other companies who may have contact with their former employer. In the case of Porsche versus VW, we witness the very intertwined relationship – note that Porsche has recently rejected VW’s offer to buy out 49% of their company in order to help Porsche cover its debt, yet Porsche acquired that debt in part because they bought majority ownership of 51% of VW.
The kicker? Porsche’s Chairman, Wolfgang Porsche, is the cousin of Ferdinand Piech – the Chairman of VW! They are not, apparently, kissing cousins, as there is a long history of feuding and challenging each other, along with a unified beginning. Ferdinand Porsche first founded the groundbreaking Porsche A.G., then later he also founded Volkswagen – making German automotive industry history. That these companies would each be headed by members of the same family is not that difficult to fathom. That these Chairmen have so publicly disagreed and displayed hostility toward each other is most unfortunate, and is threatening the future of both companies.
If this scenario instead featured two unrelated men, even if the companies had initially been started by the same person, it would still be interesting and important to the automotive industry, and to the international stock markets. That a third party, notably the Arab Emirate of oil-rich Qatar has both through VW and directly with Porsche offered to be part of the financial solution in exchange for part ownership of Porsche. At this date it seems Porsche is considering working only with Qatar, and Wolfgang Porsche considers VW’s offer of assistance to be an ultimatum, and warned in a public forum that "We won't be blackmailed." It isn’t likely that these negotiations will miraculously end with both cousins coming to consensus.
Ah, one of the great dividing lines in any close relationship – money. This is one of the reasons we hear the recommendation for families to discuss issues related to the family business, including how financing will be handled. Recognizing the specific challenges families face when working together and when, in some cases, competing with each other, is half the battle. Doing something about it by laying the groundwork of strategic planning is the other half. This is the family business litmus test – would your cousin help bail your business out from debt, or would he or she want control of your company? And if the tire were on the other, er, rim – would you help or would you tell the world you don’t trust your cousin? Family feuds are tough at family gatherings – imagine how much more difficult they become when the world is blogging about them.
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