Tommy Fulton - An Act of Congress

Copyright 2011 by Tommy Fulton.

ISBN: Ebook 978-1-4568-7425-4

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

Court documents are taken from H. L. Callahan v. Thomas W. Fulton, Elizabeth J. Fulton, Daniel R. Fulton, Samuel C. Fulton, The Finch Companies, an Alabama Corporation, CV-91-001266, (Mobile County Circuit Court, Mobile, Ala., 1991); and Thomas W. Fulton, Elizabeth J. Fulton, Daniel R. Fulton and Samuel C. Fulton v. H. L. Callahan, Case No. 1910611 (Alabama Supreme Court, 1993)

This book was created in the United States of America.

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Table of Contents

Foreword Brock B. Gordon, Attorney at Law

A s one of the attorneys representing the Fulton family in the litigation referred to in this book, I believe your author has done the small business community a great service in presenting this agonizing tale of just how bad things can get when the future is not taken into account. The true story told here begins in a somewhat typical manner. Upon the sudden death of the founder, the family business transited smoothly from the first generation to the second. This was not to be in the next transition, however, and that too is typical of family businesses. Often at that stage extraneous forces operate to destroy the unity of the owners as differences escalate. This tale demonstrates the extremes to which such forces may go to disrupt, complicate, and make costly, in terms of spent emotions and money, the lives of those who wish to continue the business.

Even very close-knit families, as were the Fultons and the Callahans, can suffer from mean-spirited and nasty dealings when a dissident allows purely personal motivations to override such long-standing family ties. Indeed, while the majority stockholders involved in this case had graciously accommodated to the extreme the political ambitions and financial desires of their minority co-owner, the true nature of his character became revealed only when they balked at his demands that they buy him out at his highly inflated price. He then initiated a heartbreaking lawsuitone in which political clout had a devastating impact on the majority owners, out of which no winners emerged, and from which the loving ties that bind a family were forever severed.

In sharing his familys nightmarish experience with you,Tom Fulton has not only achieved a personal catharsis; their story emphatically confirms that EVERY family business needs thoughtful and realistic planning for succession.

I would also like to add this personal observation. I was and remain deeply touched by the Fultons unyielding sense of honor and integrity throughout their troubled time. It permeated every aspect of their dealings with each other, with their employees, and with the world at large. Not once, not even in the darkest hours of their ordeal, did any of them ever falter from adhering to their ideals or from the certainty of knowing that in the end, they would get their company back. Indeed, they did.

Brock B. Gordon

Big Canoe, Georgia

September, 2008

Prologue

F or years, as I told people the inside story of our family business succession battles, I heard time and again that I should write a book about it. I always said that I would do that someday. It has been more than a dozen years since the final determination of our experience. As I went through all of the documentation, including letters, financials, and especially all of the court documents, the rage and disbelief built up inside of me again. I saw many opportunities that both sides of our family could have taken which would have prevented the travesty that ensued. Maybe the families would have gone their separate ways, but perhaps we could have done it in a much more genial manner.

This story is my recollection, supported by thousands of pages of court documents, letters, audio recordings, and firsthand stories from those who were involved. This is a story of what happens when family businesses do not properly plan for the future. No matter how much one generation thinks, things will fall into place at the proper time, unless you plan for smooth succession, disaster is probably waiting. I know... you should always backup your computer hard drive and have proper insurance. How many times do we have to wish we had prepared before we do the hard work required to avoid calamity? When I was young, I vividly remember the joy and excitement of family get-togethers with the Fultons and Callahans. My parents had three kids, and my mothers cousin Sonny Callahan and his first wife Pat had four kids. After Pats untimely death, Sonny remarried and had two more children.

All of us were close and enjoyed spending family time together. One of the challenges of family businesses, and the reason so many of these ventures fail in the third generation, is the neglect of a real plan of how everyone is going to fit in. The conclusion Ive reached is that everyone rarely does fit in.

One of the people I asked to read the original draft of this book told me that I needed to decide why I was writing it. Did I want to use it as a catharsis, or did I want to get revenge? Was this just a chance to retell my side of the story? The reason he asked me these things is because my first draft seemed more like two or three books to him. I appreciated his advice. (Interestingly, he thought I didnt sound quite mad enough about what had happened.)

The real reason I wrote this book is that I believe the best way to learn lifes lessons is to learn from other peoples errors. Any family succession expert can read this book and see at least a dozen moments when either side could have made more effective and intelligent decisions. Im hoping that the reader will learn from our mistakes and work in a way that makes the handing over of the baton an exciting and fruitful experience for everyone involved.

When our families ended up in court, we found out later that there were several attorneys watching our case to see what precedent would be set. Some of these lawyers represented minority shareholders and some of them represented the majority. When all was said and done, the attorneys just shook their heads and told their clients that there was no precedent because the case had been handled in such a bizarre way. Maybe our case was not a good example for attorneys to use, but the story behind it gives lesson after lesson to business owners as well as estate and succession planners.

Acknowledgments

I suppose everyone goes through major challenges at various times throughout their lives. I found it very rewarding and humbling to discover who you can count on when those challenges get you down. We had numerous supporters who wished us well and promised to pray for us.

Many others were disgusted with what happened and wanted to lash out in some way. Those who kept us in their prayers are forever in our debt.

Its easy to be cynical when it comes to attorneys; after all, you pay them to be your advocatenot to believe in you. Our family is extremely grateful to Watson Smith, Brock Gordon, and Alan Christian for their dedication to our cause. They became members of our family and they let us know how much they did believe in us. They are a credit to their profession.

Steve Mixon took on the unenviable task of representing us on the Finch board of directors, knowing that he was badly outnumbered. Steve remains a close friend of our family to this day. Jim Cochran agreed to serve on that same board. Jim was a realestate appraiser, and his help to us was a true sign of friendship. Billy Kimbrough also spent time on that board as our representative. Billy was an attorney with a reputation for toughness, which was invaluable to us in this outmanned situation.