Unrest at Hyatt
One of the most common (and destructive) internal dynamics that tends to arise when growth stalls is a loss of consensus among the management team. Because of the longstanding and complex relationships involved in family-run corporations, the issue can be especially problematic for them.
Hyatt Hotels Corporation offers one of the most notable examples of how family squabbles can interfere with business. For the last several years disagreements among members of the Pritzker family–who together control some 85 percent of the corporation–have been a distraction. That’s one reason why the company is planning on diversifying ownership by selling more than $1 billion of stock in an initial public offering.
It’s a smart move, but it may not be enough. Hyatt’s most recent SEC filing indicates that Pritzker family interests will still maintain the ability to control the company. In fact, it’s such a concern that the IPO’s prospectus includes a formal warning related to the family’s propensity for discord, saying it could “disrupt our business.” Whether or not the admission is unprecedented, it’s certainly remarkable.
No company is ever free from the danger of a breakdown in consensus, but having control vested in a family with a propensity to fued doesn’t help. If Hyatt is going to go public, it needs to be public. Some problems can’t be fixed halfway.
Great article.
Remember,
Don't go into business with your friends or family?
Well, it has a lot of merit.
Kirk Nickey
772-545-4999
PS-I have first hand experience in this.
Comment by Kirk Nickey — Tuesday, November 3, 2009 @ 9:10 AM