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Telling Furphy's Isn't Part Of The Succession Game

Wednesday 13 September, 2000

The Furphy family in Victoria have been manufacturers since before Federation - so they know a bit about family company succession issues.

Entrepreneur: Adam Furphy, Managing Director
Company: J. Furphy & Sons
Business type: Manufacturing (foundry)
Founded: 1873
Turnover: $10M - $50M
Head office: Shepparton, Victoria
Contact details: +61 3 5832 1400

The J. Furphy & Sons Story

Adam Furphy was lucky. He never had to convince his father, Andrew Furphy, of the need to plan for succession. Adam's father tapped him on the shoulder when he was 24. Adam, a mechanical engineer, then spent two years working in the business, J. Furphy & Sons. Adam says: "I think Dad was assessing me, working out whether I was right for the role."

He must have been. By 27, Adam was appointed managing director of the foundry business. He says: "It was risky to appoint someone so young to run a medium-size business. It was also very difficult for my father to give away something he has built, nurtured and loved. So I am incredibly grateful for the opportunity."

Adam is the first to admit he can be hot-headed and impetuous. He says: "But Dad lets me take risks and I do have the final say."

What matters is that Adam shares a similar vision and values with his father. Adam says: "We have totally different ideas on the way the company is run. But we are not just focused on the bottom line and our staff are very important to us. So in the end we find common ground."

Adam says that for the parent-to-child transition to work, it is essential to have his father still mentoring him on a daily basis. He says: "But [Dad] does not interfere. He is a creative, inventive bloke so he is in charge of special projects and research and development. He also has other investments and interests."

Adam's father is still a major shareholder, having bought out shareholdings from other family members several years ago. Adam only owns 2%. He says: "While we have worked out the management succession we are still working on the ownership succession."

Unfortunately, the best succession plan is for the person with the shares to die and leave it to their successor in their will, according Adam. He says: "While you wouldn't want that to happen, it is also unlikely to happen. People live a long time now." He expects the shares to be gifted to him.

Key learning points:

  • Raising succession issues - If the patriarch will not address succession issues and you are reluctant to raise it, suggest a family business adviser meet with the whole family. Ask them to raise the succession issue.

  • Family involvement - Encourage family members, including siblings and cousins who might be involved in the business, to attend regular family meetings. This separates family issues from the business.

  • Independent directors - Make sure the board has at least one independent director. They will see the need to undertake succession planning and support you raising the topic.

  • Choosing a successor - Do not assume that you will be the successor. Put the business first and insist a criteria be developed. Then ask yourself: "Do I fit the criteria set out by the company? Do I have the skill-set for the job or am I being hired because of my surname? Do I have leadership and entrepreneurial qualities? Am I passionate about the business and seeing it grow?"

  • Working with parents - Once the transition has taken place, encourage your parent to give you independence and power as managing director. Insist the parent stay on as mentor and be given a meaningful title such as head of business development. Be prepared for a gradual transition. Make sure there are escape clauses if your position does not work out.

And is it possible the elevation to the helm at such a young age could make him arrogant? Adam laughs. He says one of the company's first products was a water cart on cast iron legs, which was stamped with the brand name Furphy. During the World War One, soldiers used to gather around the water carts and "tell untruths". Adam says: "That is how 'It's a furphy' came into the language. Our company is associated with a lot of bullshit and that makes you humble."

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