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A friend of mine recently started a business and she is joined by her sister. So far, things are going fairly well. But, my friend realizes there are lots of potential problems when mixing family with business.
Well, this week, the founder of one of the most famous family businesses -- Robert Mondavi -- died this week. He was 94.
Mondavi launched his winery in 1966 and turned it into a global powerhouse. While he was innovative (by adding new computer technologies), he also realized there were some key European techniques that would be key for his success (such as stainless-steel fermentation tanks). He was also a marketing genius (hey, establishing a winery in California was certainly gutsy).
Actually, in 1943, Robert wanted his father to purchase the Charles Krug Winery. He agreed – so long as Robert would run it with his brother, Peter. The operation was in bad shape. But the brothers worked quickly to improve things (for example, they had the smart idea of having a tasting room for visitors).
Yet, there was also sibling rivalry. In some cases, the fights got scary. By 1965, the differences were irreconcilable and Robert punched Peter's face (because of a purchase of a fur coat for Robert's wife). It was the end of the partnership and, as a result, there was extensive litigation (although, after about 20 years, the brothers started to talk to each other again).
Running his own show, Robert had the freedom to try his ideas. For example, Robert teamed up with Baron Philippe de Rothschild SA to create Opus One. It turned out to be a huge success.
However, by the early 1990s, the wine industry was under much pressure. So, Robert took his company public, so as to bolster the capital base. Then by 2004, he sold the operation to Constellation Brands (NYSE: STZ) for roughly $1.35 billion.
And, if you want to learn more about the story, you can check out Robert's autobiography, Harvests of Joy: How the Good Life Became Great Business
Tom Taulli is the author of various books, including The Complete M&A Handbook
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