Who really controls a family business? Ask Sika’s managers


If you talk to the members of families controlling mid- to large-sized family businesses they will tell you how important it is to bring in professional managers at very senior levels.

Most will also say how well the relationship works between these managers and the family. That’s probably right in most cases. But it can also go wrong – and sometimes, spectacularly wrong. Take the case of Sika, a huge maker of chemicals and adhesives for the construction industry. 

This week the family that controls the Swiss business accepted an offer to sell Sika to the French industrial giant Saint-Gobain for more than €2bn. The owners – the Burkard family – could sell because they control 52.4% of the voting shares in the business.

The problem is that the management of Sika don’t want to sell, or at least not to Saint-Gobain. They say that the family isn’t in a position to sell because they only control 16% of the economic shares in the business.

Their anger was conveyed in a press release they issued on behalf of the company. “The board and group management of Sika have neither been involved nor consulted in connection with the proposed transaction. The board and group management do not support the change of control of Sika to Saint-Gobain,” it read. 

Saint-Gobain, anxious to buy Sika to grow its business, especially in emerging markets, is unsurprisingly taking the family’s side and said the management should get on with managing the business.

And, despite the management’s consternation, the family can sell their majority stake in the business to anyone they want to.

The dispute raises many questions, not least governance issues around dual class shareholding. But arguably the bigger one centres on the relationship between the non-family executives and the family.

This has clearly broken down, and the tendency is to sympathize more with the non-family management on the issue. After all, aren’t they putting the company’s interest first, whereas isn’t the family’s decision to sell driven by greed? Whatever the case, non-family managers need to be realistic about who ultimately owns the business, and as such, who makes the big decisions.

As Per Arne Andersson, the non-family chief executive of the family-controlled Swedish furniture company Kinnarps recently told Family Capital: “As CEO you are number two – you might be number one in the day-to-day running of the business, but you can never be out in the market saying you are Kinnarps. That is something you have to have in mind: that Mr and Mrs Kinnarps are always the owners.”

Sometimes family issues can just get too hard to handle. “Nothing is forever,” says Joachim Schwass, professor emeritus of family business at IMD business school in Switzerland. “A growing number of family members and owners will struggle with increasingly diverse interests and views, and may just agree on accepting an offer that is too good to refuse.”

For whatever reason, the Burkard family decided the time was right for them to cash out. The management knew the deal when they signed up, so their complaints ring hollow. They will just have to grin and bear it.