In 2012, Peter Seidler formed the O’Malley Group, which purchased MLB’s San Diego Padres for $800 million. Eight years later, he took on the role of chairman and became the organization’s largest stakeholder.  Unfortunately, Mr. Seidler passed away at age 63 in November 2023, with his brother John succeeding him as the team’s control person.

Earlier this week, it was announced that Sheel Seidler, the widow of Peter, sued two of his brothers in an attempt gain control of the San Diego Padres. Sheel claims that Bob and Matt Seidler breached their fiduciary duties and conspired to sell trust assets to themselves at “far-below market prices.”  In a letter to fans, Sheel discussed this as her last resort and stated, “as the holder of the largest individual ownership stake in the San Diego Padres, I am seeking to be named the control person for the Padres.”  The Seidler brothers claim that the complaint is entirely without merit as Peter had a clear estate plan that specifically named three of his nine siblings as successor trustees. According to Sportico, the Padres are worth $2.03 billion, 15^th in the MLB and 85^th among all major U.S. leagues.

Clear ownership succession planning is the best tool to prevent family dynamics that could potentially destroy the family business

Why Is Ownership Succession Planning Important?

Whether your family business is the San Diego Padres or not, clear ownership succession planning is the best tool to prevent family dynamics that could potentially destroy the family business.

While avoiding shareholder conflict is never guaranteed, family business directors can add an additional layer of protection to their family legacy and long-term wealth through focused succession planning.  As we start a new year, filled with unforeseen wins and losses, here are some thoughts to keep in mind when it comes to your family business and succession planning.

Maintains Flexibility

Rather than stress about the particulars, the goal is to create a framework for succession planning that guides the family and allows for the inevitable changes.  Working to create a succession plan with interim goals and reviews occurring at least annually will promote flexibility within the framework created.

Having a plan for when succession becomes a reality is imperative for continued success. If an unforeseen event occurs, you will have a strategy in place to determine how the business will operate moving forward.  While you cannot plan for a devastating injury to your starting pitcher, you can have the framework for how to respond to such an event. Establishing a succession plan that evolves with the times can be the difference between efficiently addressing an unforeseen succession event and allowing it to cause additional tension.

Having a plan for when succession becomes a reality is imperative for continued success

A good succession plan today is better than a perfect plan later. Starting the succession planning process now – understanding that it will evolve – should spur family business directors to actionable plans that will help everyone sleep better at night.

Provides a Next-Gen Focus

The combination of business changes, generational differences, and complex family dynamics that make family businesses unique precludes one-size-fits-all solutions to management succession. The primary questions associated with management succession are: (1) Who will be the next leader of the business? and (2) How will the transition occur?

Passing the baton to the next generation can be a daunting task. To encourage a smooth transition from one generation to the next, family business directors should not underestimate the importance of engaging the next generation of family leadership early and often. Fostering a sense of responsibility among the younger generations of family owners starts with opening a clear and consistent line of communication.

Family business directors, just like MLB owners, need to ask if they have the right ownership succession plan in place. Have we built an organization that matches what the next generation of leadership wants from the business? Is the next leader of our organization currently with the company or do we need to externally recruit them?

Conclusion

Every business has a succession plan, whether formulated or not.  Careful planning today can stave off heartache in the future.  Successful family businesses need to prioritize flexible succession planning to be prepared for potential adverse or unforeseen changes.  Give one of our professionals a call today to help start preparing your family business’s ownership succession plan.