Craig Duchossois is executive chair of Duchossois Capital Management (DCM), the investment company and family office of the Duchossois family. The family sold Chamberlain Group, Inc., a leading maker of access control systems such as garage door openers and gate access devices, in 2021. He talks about the creation and evolution of a “hands on” holding company to a diverse investment company that now includes their family office:
Family office origins
Fourteen years ago, I approached my siblings to share my concern the next family leader was 30 years my junior. Running a hands-on holding company is an around-the-clock job. I wasn’t sure we had anyone (at least at that time) who appeared to be interested and qualified. I recommended we take the appropriate time to liquidate our portfolio of operating companies to eventually become a standalone investment company.
A diverse investment company
DCM, LLC has a board of managers consisting of four family and four independent managers.
The family office, a department within DCM, provides guidance to our shareholders in tax, estate, personal development — concurrent with our family values — and a variety of different types of coaching, counseling, and training for the 3G and now 4G: trying to help them find their passion and understand what it’s like having a family business.
We treat our shareholders as an investment firm would, with quarterly updates and annual manager meetings. The family office department works with them individually on a quarterly basis to review their cash flow, their income statement, their balance sheet. You’ve got excess cash – what are you going to do with it? You’re running out of cash – how do you want to slow down the outflow? The company provides support and guidance. The shareholder is responsible for the decision.
All shareholders have their own balance sheet, income and cash flow statements, and their own investment strategy. They need to accept the responsibility for their own family.
We are concerned about being perceived as a concierge service. If someone asks, ‘How do I apply for a mortgage?’ We say, ‘We have a couple of banking relationships to consider. We’ll make the introduction.’ This is a mentoring opportunity: managing cash, running out of money – all these things are lessons in life. And if you have a concierge office, the first thing someone does when they get in trouble is say, ‘Hey, can you solve this problem for me?’ We have seen catastrophic results by not allowing family members to solve their own problems.
A generational transition
My daughter Ashley is the incoming chair, effective April 1. I kept my commitment not to shackle the 3G leader with having line operating responsibility like an executive chair would have. She has the traditional role of a chair, along with protecting family values, being an ombudsman to the community, developing our people and concentrating on the culture.
My daughter early on exhibited an interest in leadership responsibilities. She got her feet wet in high school and college, and, while raising her family, as chair of Metropolitan Family Services for three years. We gave other 3Gs opportunities to work for the company, to participate in the foundation, the private trust company, and the family council.
Our independent managers are recruited with 2G and 3G leaders leading the search. They also participated in our last CEO search. When we sold our company, we went from seven independent directors to four. We also have four family managers. We have a safety net so family managers have votes to outvote the independents. You and I have both seen companies where the family, for whatever reason, lost control of the company to outside directors. Additionally, the independents sit at the pleasure of the family.
Good governance is key to successful succession. Training the shareholders is essential. Governance is a family responsibility.
The role of philanthropy
Our family foundation and private trust company are outside the company and independent. The family office provides legal and investment advice to the foundation and stockholders.
We hold the beneficiary responsible for certain objectives. If they stray from their mission, we can stop multiyear or planned gifts. It really would have to be serious. We’re looking for protection. If they abandon the very reason we were investing, we may discontinue honoring our objectives as part of our support.
Lessons learned
Involve the next generation early, especially in relating to family values. Put all eyeballs on the desire to have fair and equitable governance that minimizes activism, disruption, family strife — and somewhere in there you’ve got a shot at it.
- Be open and transparent.
- Offer opportunities for personal values and professional growth.
- Offer opportunities for leadership.
Prior to our 100-year anniversary, we started 18 months out to memorialize our history with plenty of photos and emphasis on lessons learned. Our target audience was the generations that follow. We screwed up a number of times. We made mistakes. It had a humble theme, independent of the fact we enjoyed good fortune.
