The Wolters appear to have created the ideal family enterprise.
Together, Karen Wolters and son Bob Wolters Jr. groomed a trio of successful, fast-growing firms with a total of 85 employees and $40 million in revenue.
There’s only one problem–they barely talk anymore.
“We still get together for business meetings, but we don’t get together for many holidays,” Karen Wolters said.
Disagreements over a range of issues, from management styles to tolerance for risk to succession, resulted in the family fallout and a division of the businesses. Although his parents still have ownership stakes in two of his companies, they no longer have operational roles.
What happened to the Wolters provides a cautionary tale of how even successful family business deals can simultaneously result in family fortunes and splits.
Disagreements over a range of issues, from management styles to when Wolters Jr. would take over the businesses, resulted in the family fallout and a division of the businesses. Although his parents still have ownership stakes in two of his companies, they no longer have operational roles.
Whether some of the problems could have been avoided is debatable, but the The conflict shows not only how difficult it is to restructure family ties into business relationships, but also how different generations often have vastly different financial goals.
Also apparent is how quickly tension at the top of a family enterprise can filter down through the ranks.
“If there’s any conflict between owners, employees will seek to exploit it,” said Joseph Astrachan, a business professor at Kennesaw State University and editor of the Family Business Review.
The family’s entrepreneurial itch began with Karen Wolters, a nurse who started a cooking school in Palatine in 1982.
She soon came up with an idea for a garnish tool called the Kustom Kutter, which she had manufactured after the family moved to Taiwan in 1984. Her husband, Bob Wolters Sr., was then an executive with Amoco.
Back in Chicago, the The tool caught the eye of Doris Christopher, founder of the Pampered Chef, and Karen began doing quality- control work for Christopher’s firmcompany in Asia.
When the Wolters family returned to Chicago in 1994, Karen started a company that helped design and manufacture products for the Pampered Chef.
Wolters Jr., who had been sales manager at a Champaign auto dealer, soon after joined the family firm,, then called Wolters Group International Inc. which was then called Wolters Group International Inc.
To save money on taxes down the road, the parents took one-third of the company, while their son controlled the remaining two-thirds.
Fueled by the rapid growth of the Pampered Chef, the Wolters’ business took off.
“We couldn’t bring people in fast enough,” Karen Wolters said.
The family launched another company in 1996 after Wolters Jr. and his mother went on a sales call and learned about a technology that uses magnetic energy to quickly and efficiently heat items.
Wolters Jr. began spending most of his time building the new company, CookTek, which makes portable burners and heated pizza delivery bags. In developing the business, he moved aggressively–investing $1 million in marketing the company before its products were completed and spending $500,000 to develop an alloy for the pizza bag product.
The CookTek bags and heating units are now used in more than 5,000 Domino’s locations, as well as by Pizza Hut and other chains.
Tim McIntyre, a Domino’s spokesman, said the industry has long been looking for an improvement to insulated bags, which not only had trouble keeping pizzas warm, but also trapped moisture.
“In the worst- case situation, you would have a cool pizza that was soggy,” McIntyre said.
While CookTek was finding success, Wolters Jr. said he kept being pulled back into problems at the other firm, claiming hhis mother wasn’t around enough to deal with the issues.
Beginning of the end
Mother and son also had run-ins on other issues, including whether particular employees were doing their jobs and if they should get large bank loans to try to quickly grow the business.
Wolters Jr. said the beginning of the end of the family running the enterprise together came in 1998, when he sought to create a new structure for the businesses and expected his mother would start scaling back her involvement.
While Wolters Jr. said his mother planned to pull back and join her husband in retirement, she did not step away until, as she said, the stress got to be too much.
“The ultimate act was her resignation, but the writing was on the wall that there was no working this out,” he said.
Karen Wolters and her son agree on two areas of conflict: –their varied management styles and goals.
“I am very hands- off, and I’d say that my son is more controlling in a business environment,” she said.
Another issue both identified was how they had different levels of risk tolerance. While Wolters Jr., now 36, was willing to take major financial risks to create a sizable company, his parents were nearing the end of their working lives and didn’t want to put their comfortable retirement in jeopardy.
Nancy Waichler, an associate at the Family Business Consulting Group and whose grandfather founded the Follett Corp., said families like the Wolters often face bigger challenges because their firms were started after the kids weare grown, and relationships were established without the influence of a business.
“For kids growing up in a family business, it’s part of the culture they live with,” said Waichler, who added that having an outside board of directors can help families sort through business issues.
Breakup necessary
Ultimately, the Wolters split control of the family enterprises.
Wolters Jr. runs Global Contract Manufacturing, which still does work for Pampered Chef, and his parents still own a third of the firm. He also controls mostnearly all of CookTek, although his parents own a small share.
His parents took full ownership of Ignite Design, a firm the family had created to concentrate on design and engineering work. That business, which is three blocks from the headquarters of their son’s firms in the West Loop, has done work for Starbucks, Nestle and other companies.
Karen Wolters brought in a new president for Ignite, Sami El Saden, and she and her husband spend most of their time in Effingham in central Illinois, where they built and operate a small conference center.
It is’s unclear whether the family relationships will ever be repaired.
“They look at it as if I’m an ungrateful son, and I look at it that good business people understand the only way to run a company is with one leader,” Wolters Jr. said.
On one point, though, they agree–family and business don’t mix.
Karen Wolters advises starting businesses solo, and then giving the money away to the next generation.
Karen said Ignite’s new president recently talked about eventually bringing his children into the business: “I looked at him and said, `Sami, I didn’t just hear you say that, did I?'”
