Four brothers and a funeral

An elegant solution to generational succession has enabled Tobin Brothers to become, unusually, a more concentrated family business over time.

Most family businesses get complicated, and many fall apart, a few generations from the founder, when there are a lot of descendants – each with different aspirations for their own families and opinions about how the business should run. It’s a rare family business that can last beyond two or three generations.

But funeral director Tobin Brothers is one that started off where most family businesses only get to after two or three generations – with four brothers. Each of them had a few kids, and as a result, the second generation of Tobins was as numerous as most fourth or fifth generations. But instead of squabbling, the Tobins came up with an interesting and elegant solution.

In 1934 a young firefighter from a well-known Catholic family, Leo Tobin, was offered a job as an undertaker. The funeral director wanted Leo to help increase his market share of Catholic funerals.

He didn’t take the job but did mention the offer to his brothers, Alphonse, Tom and Kevin. Alphonse reckoned that if there was an opportunity to go for the Catholic funerals market, they should be the ones to do it.

So they each scraped together £50, spent £150 on a hearse and put aside £50 for rent. Alphonse actually started the business because the other three wanted to keep their jobs, so it was called AV Tobin at first. But as it became successful and Alphonse started getting recommendations from priests administering the Last Rites, Leo, Tom and Kevin joined and it became Tobin Brothers.

As it happens the second generation of the family actually in the business also numbered four, including one of each of the founders’ sons: Leo junior, Des, Michael and Geoff. Apparently it just happened that way, but it was convenient since there were 20 cousins in total, all of whom owned part of the business.

In 1985 they came up with their grand solution: to focus ownership of the business on the four cousins who were working in it, and give the rest ownership of the properties through a separate company. It meant that instead of getting dividends the other 16 cousins got rent, and eventually, in 2003, were able to cash out by selling properties to an investor for $14 million.

The downside is that the trading company didn’t, and doesn’t, own its properties. But it was a small price to pay to solve an age-old family business problem.

The four cousins working in the business became three in 1987, when Geoff sold to the others, and two equal owners in 2004 when Des sold to Leo and Michael, after first offering his stake to his children, Martin and Frances.

At that stage Martin was managing director of Tobin Brothers, having taken over from Des, while Frances was running a subsidiary offering funerals conducted entirely by women, called Frances Tobin & Co. Martin and Frances decided they couldn’t, or wouldn’t, buy their father’s share from him so it was sold to their uncles.

Martin eventually resigned as managing director last year and was replaced by James MacLeod, who had been working in Tobin Brothers since 1987 – the first non-Tobin to be in charge. His father Norm also worked in the business for 40 years.

So Tobin Brothers has managed to be a family business that got more concentrated as time went on, not more diverse, as most do: from four brothers, to four cousins, then to three cousins and finally two, with a non-family member running the business.

Ownership is in two family trusts, Leo’s and Michael’s. The board consists of the three of them: Michael Tobin, who is chairman and works in the business full time, and Leo the 3rd (since Leo J passed away a few years ago), James MacLeod, plus the general manager Nick Fogarty and the family’s long-time accountant, Graeme White.

There is a Family Council, although it doesn’t really need to meet separately to the board, plus a family constitution, which is mainly concerned with laying out how people with the surname Tobin can get a job with the firm (on advice from Family Business Australia). This is pretty useful, it seems to me, since there are already 12 Tobins in the business with more to come: the constitution tells family that they can’t just expect a job, that they need to bring skills into the business.

James says any awkwardness about having members of the family reporting to him is generally overcome by being transparent and open with them, although he says he expects more from them than the rest of the 180 staff.

The family employees get a "heads up” on any significant changes, as well as the financials (the company does about $40 million a year in sales and pays good dividends).

Funerals are a steady, if competitive, business, since death and taxes are the only two certainties in life. A typical funeral costs between $6000 and $7000 for cremation plus another $2000 if it’s to be a burial, although of course you can pay a million dollars for a mausoleum if you want.

Tobin Brothers still do a lot of Catholic funerals (about 45 per cent of the turnover), but these days undertakers are more like wedding planners, arranging the details of a ceremony and the party afterwards to celebrate a life rather than mourn a death. And it helps having a lot of people in the business with the name Tobin – client families feel like they are getting special treatment if they’re looked after by a Tobin.

The two branches of the family are now separately starting their own succession planning, since Michael and Leo are getting on. But they haven’t worked it out yet. Whether there is another elegant solution like 1985 so that fragmentation can be headed off remains to be seen.

Follow @AlanKohler on Twitter

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