THE strain which can be placed on family relationships when companies pass from one generation to the next was laid bare at a conference in Glasgow yesterday.

Simon Hannah, managing director of JW Filshill, spoke of the “hard” conversations which he, his brother and sister had with their parents in the years before he took over the running of the Glasgow-based wholesaler in 2010.

Mr Hannah said he and his siblings were determined to address all aspects of what the transition would mean for the affected family members as the succession was formalised.

Speaking in conversation with Tom Craig, chairman of Craig Corporate, at The Scottish Family Business Conference, Mr Hannah said: “We basically approached mum and dad and said: we can’t accept that we are not going to talk about this. We all quite like each other so we [said] we want to talk about this.

“That was an interesting process, because it wasn’t mum and dad who decided what was going to happen. We talked about income aspirations, control aspirations and equity aspirations. It took about three or four years to get through it.”

Mr Hannah, who had worked for Filshill for 10 years before taking over from his father, Ronald, said it had been essential for him and his siblings to establish “common ground” as they entered the discussions on succession.

He said: “One thing we could all agree on was our collective desire to educate our kids privately. That was the gel that brought the conversation together. The task is to find some common ground and use that as an acceleration to move the conversations forward.”

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Ultimately, the company was valued, and a formula was agreed under which the three siblings acquired an equal share of the business. But while Mr Hannah and his brother continue to work for Filshill, his sister does not, having run a successful events business in her own right in Sydney, Australia.

Succession planning was not the only challenge Mr Hannah faced as he prepared to take over from his father, whom he credits with transforming the wholesaler, which began life as a boiled sweets manufacturer in the Gallowgate area of Glasgow. Mr Hannah, who revealed that his father had effectively rebuilt the company from scratch after it faltered while his grandfather succumbed to illness, said: “People always say it’s about learning the business. Actually, it wasn’t. It was more about learning the people in the business. That is key.”

Mr Hannah, whose firm employs around 200 staff, added: “That’s something that is very unique in family businesses – the staff and the people are more important than making that bit of extra profit.”

Mr Hannah, who represents the fifth generation of his family to run the company, spoke about other challenges he has faced at the helm.

He talked of difficulties when banks lost their appetite to support retail businesses in the aftermath of the financial crisis of 2008 and 2009, and the unhappiness some staff felt when pay rates were switched to a system based on productivity, following investment in stock-picking technology in its Hillington warehouse. Mr Hannah said this had been a “real wake up call” and resulted in major changes in the way Filshill engages with staff.

The conference also heard from Robin Worsnop, owner of Rabbie’s Travel, who provided an overview of how his tour company has evolved since its formation in 1992. Rabbie’s now operates tour buses from bases in Edinburgh, Glasgow, Dublin and London, with plans to open in Aberdeen and Manchester next year.