The Anatomy of the Yanson Family Conflict

By: Prof. Eric Soriano

SOMETIMES blood is not thicker than water and family will cross you quicker than strangers! One of the top stories that circulated in the business community the past few weeks was about a feuding family. The last name may not ring a bell to many, but the family through its Group of Bus Companies is the country’s biggest operator of buses carrying a quarter of a billion passengers annually all over the archipelago. The group is popularly known for its Ceres Liner and Vallacar Transit. It is headquartered in the birthplace of my mother, Bacolod City, a highly urbanized city located in the southern part of the Philippines and operates a fleet of 4,800 buses nationwide. Its closest competitor, Luzon-based Victory Liner, has close to 800 bus units. This is the Yanson Group, in almost every which way, a corporate fairy-tale. Till a few weeks ago, that is.

 

History of Conflict

The long-running saga has now taken an ugly, even sinister turn. The simmering rivalry between the siblings, four against two including the matriarch threatens to rock the empire to its foundations and throw up some very dirty linen in very public spaces. Last week’s remark by the new president that there were “trust issues” against the ousted president brought into the open what was suspected ever since Ricardo Yanson Sr.’s death in 2015: that the battle for control of the spoils that afflicts most Asian families, when a powerful patriarch passes away, had visited itself on the country’s most admired transportation company.

What may have started as petty misunderstandings among siblings during childhood turned into a volatile brew. Eventually, the conflict turned into a hostile corporate takeover by one group comprising four siblings. This brought into the open the messier underpinnings to the conflict and offered a revealing glimpse into a longstanding and successful family business that has been haunted by internal squabbles.

The stakes are massive. On top of the billions of pesos’ worth of assets, the split (still unofficial for now as the court is still evaluating the positions of both parties) yet inevitable after last week’s development where the company president, younger sibling Leo was ousted in a boardroom brawl. This action has cast a shadow over the Yanson empire and raises uncomfortable questions about its future. The current battle extends beyond the two warring sibling groups. It has spilled over to other stakeholders caught in the cross-fire. And the most vulnerable are the 18,000 employees on whose lives are entirely dependent on what will eventually play out in the coming months.

 

The Root Cause

What really caused the meltdown? A generational transition is a critical point in the life cycle of a family business. Business owners believe they have a foolproof succession plan in place, but problems arise when the founder dies and carelessly passes the torch to a successor that may not necessarily be acceptable to the rest of the family. As the business transitions from first generation (owner-managed) to that of sibling partnership (second generation), careful collaboration is needed to accommodate the diverging needs of the surviving spouse and the adult children.

 

From my perspective as a family business advisor looking on the outside in, it is very clear that sibling rivalries, ego, jealousy, money, emotion, trust, power are likely to be among the root causes why the conflict erupted. I am certain that the squabble reached boiling point due to the family’s poor handling of the events leading to the power struggle.

 

All About Ownership and Control

The current dispute is all about ownership and control of the bus empire. This is often due to the traditional Asian practice of giving equal inheritance to the offspring. While this gives a fair share to each member of the next generation, this diluting event automatically diminishes ownership of the firm leading to a complex transition, more minority owners who lack commitment but are entitled and fragmentation and instability. Complicating this tangled ownership process is the lack of institutionalized mechanisms for conflict resolution. Inevitably, this can lead to family members resorting to external bodies such as the courts, shareholder votes and media, while refusing to talk directly with each other.

When families turn to lawyers and the courts, it is very difficult to restore trust in a family. This is the Yanson family dispute unfolding. It is a live case of family acrimony worth monitoring as it is headed to tragedy. My advise to the family is very straightforward: It is time to stop this madness and talk about the difficult issues. Only when they talk, will they be able to solve something.

“My father told me to beware of family feuds. If you have family members contesting over the pot, then nobody looks after enlarging the pot. We are merely stewards of the family wealth which is to be enjoyed over successive generations.”

A good piece of advice from a third generation successor of a 130-year old family enterprise whose family business was rocked several times in a bitter dispute for almost 50 years.

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This August 31, a Saturday, I will be sharing the stage at Manila Marriott with prominent Governance Leaders / family business owners in the biggest Family Business gathering in the Philippines. The public event entitled, “Can Family Run Businesses Last Forever? I will share the secrets in building 100-year old enterprises. Seats are limited. To reserve, please register at 09228603186 orevents@wongadvisory.com

 

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Prof Enrique Soriano is a Book Author, World Bank/IFC Governance Consultant, Senior Advisor of Post and Powell Singapore and the Executive Director of Wong + Bernstein Family Advisory Group, a research and consulting firm in Asia that serves family businesses and family foundations. He was formerly Chair of the Marketing Cluster at the ATENEO Graduate School of Business in Manila, and is currently a visiting Senior Fellow of the IPMI International School, Jakarta.