4th Generation Keeps Freedom in the Family
Many families have shareholders that chose to cash out rather than continuing their commitment to the business. Recently, Freedom Communications had to resolve this issue.
Freedom Communications was founded by R.C. Hoiles in 1950. The company publishes The Orange County (CA) Register, 64 other daily and weekly newspapers, and owns eight television stations. The company and its flagship newspaper is a standard-bearer for libertarianism, small government and the rights of individuals. Today Freedom is owned primarily by about 15 third-generation and 30 fourth generation descendants of the founder.
For two generations, the Hoiles family has experienced considerable conflict. One of the founders’ sons tried to break up the company and cash out some twenty years ago. His son, Timothy C. Hoiles, a director of the company, has sought similar goals and threatened to sue if he cannot get satisfaction.
For the last ten years, the family business’s fourth generation has been meeting to learn about their company and build relationships with each other. Over the weekend of August 10th, the family met to consider Timothy Hoiles demands. At that meeting, the fourth generation – young people in the 20s and 30s – led their family in a decision to transfer ownership to their generation rather than selling the company. In the process, “people who want liquidity can and will get bought out while Freedom will remain a privately-held media company,” according to Tom Bassett, 38, a tax attorney who is part of the fourth generation. The younger generation will work with financial advisors to identify the best means of funding the transaction.
The option of selling the company was rejected because it would mean the family’s loss of control, eliminate opportunities for the family to be involved in the business, end the company’s commitment to libertarianism, and potentially negatively impact relationships within the family.
“We want to maintain the legacy our great-grandfather started,” said Kirk Hardie, 26. He noted that members of the fourth generation are closer and more cohesive than their elders.
The decision of the Hoiles family to keep their business in the family illustrates the power of family meetings to deal with conflict and the importance of the conscious development of the younger generation into a cohesive ownership group. It also shows how a properly prepared younger generation can take initiative, responsibility and provide the leadership required to sustain a family business. We congratulate the family owners of Freedom Communications as they go forward together with the leadership of a new generation.
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