Hemas Holding PLC (HHPLC) was a Colombo headquartered holding company. It had subsidiaries in a wide range of businesses. HHPLC was headed by Steven Enderby as Chief Executive Officer (CEO) with Husein Esufally as Non-Executive Chairman. The professionally managed but family-controlled conglomerate, which was already one of the dominant private sector entities in Sri Lanka, was attempting to transform into a regional powerhouse in South Asia. The Esufally family held majority shares in HHPLC, and had members of the family on the HHPLC board. The family had also formed a Family Business Board (FBB) consisting of Murtaza Esufally, Abbas Esufally, Husein Esufally, and Imtiaz Esufally, to manage the relationship between the Esufally family and the HHPLC Board. The FBB was a device to ensure that the relationship between the larger family and the top management of HHPLC could be managed smoothly. The members of the FBB were proud of their journey so far. However, they wondered whether there could be further improvements in the mechanisms to ensure that the interests of all the stakeholders associated professionally with HHPLC were met, even as the interests of the current and future generations of the family were protected.
Family-run businesses form a very large proportion of the businesses in any economy, including the developed economies. In the developing economies, where the institutional context for capital markets are less evolved, the proportion of family-run and/or family-controlled businesses is even higher. However, family-managed businesses often flounder by the time the third generation gets to the helm of affairs.
The objective of this case is to allow case participants to understand the sources of family and business tensions that have the potential to hurt family and business, and learn of possible ways of addressing them to protect the interests of the family as well as create space for professional managers to manage the business in the best interest of all stakeholders.