On June 26, 2018, Davis Wright Tremaine LLP hosted representatives of a prominent Northwest family-owned business at the latest edition of our Family Business Legacy Series. Jenni Isaak, Rick Robinson, and Rush Riese were on hand to discuss their family-owned business – the diversified manufacturing company, Hotstart, Inc. This fourth generation family business celebrated 75 years in business last year, along with booming sales, and expansion globally.
The discussion delved into a myriad of topics, but there were a couple of reoccurring themes. Perhaps most impressive was the structure and formality the stakeholders have adopted to preserve their organization. This has included forming board committees, installing a family business charter, adopting a family council and executing a formal buy sell agreement for the shareholders. Interestingly, much of this derives from Hotstart having formally characterized itself as a “business first” family business. Under this model, decision making focuses on what is best for the business, not necessarily what is best for the family. It is rare to hear a family-owned business address the question with such clarity, but Hotstart has found that being a “business first” family business facilitates a long-term approach for success and eases decision making.
Another common point in the discussion was Hotstart’s focus on transparency and communication from the company to the family and vice versa. In addition to the best practices you might expect, Hotstart has implemented two unusual tools to achieve these goals: a communication matrix and regular surveys. The matrix is a written tool that serves as a protocol for what items need to be communicated to the family members and at what levels. The surveys go out to the family stakeholders to gauge the family’s sentiments on topics such as board effectiveness, areas needing improvement, and more.
Tying all of these efforts together, Rick Robinson, former chair and CEO of the business and current director, stated that the main focus for the family at Hotstart is stewardship. The older generations strive to illustrate good governance and educate its members on a wide range of matters, like the importance of estate planning. With the family stakeholders consisting of 59 members including 17 current owners of the business, Hotstart is bringing the heat not only in the marketplace, but also in effectively organizing and managing the family behind it.
To learn more about Hotstart, click here.
Joe Weinstein represents companies in corporate structuring, mergers and acquisitions, divestitures, and other business transactions. He focuses particularly on transactions involving family or closely held businesses, private equity funds, and international businesses. Joe has substantial experience in the food-related industries and assists clients with the purchase, sale, and finance of such companies. Joe can be reached at JoeWeinstein@dwt.com or directly at 206.757.8165.