Chris Davis and his older brother, John, run a masonry business together in Egg Harbor Township.
Davis Brothers Masonry and Chimney Sweep cleans chimneys and flues and performs both cosmetic and major repairs. They learned the business from their father, John Davis, for whom they worked during and after high school.
In 2005, the brothers left their father’s company to go into business on their own.
“The two of us have worked side by side our whole lives. We trust each other,” said Chris Davis, 40, of Mays Landing. “We’re successful because we’re together. In a family business, that’s most important.”
Sometimes, brothers or sisters will decide to start a business together. More often, they take over a parent’s business when he or she retires or dies. Either way, doing so has its advantages and pitfalls, experts said.
Sibling-run businesses that have clearly defined roles and expectations often outperform other businesses, said James Weiner, principal with Chicago consulting firm Inheriting Wisdom. He offers consulting to family-owned businesses.
“They have the strength of family and a shared motivation. When that happens, it’s a terrific combination,” he said.
But incorporating a sibling relationship into a business situation has the potential to magnify family friction, Weiner said.
“The problem is what I call the dragons: jealousy, envy and greed, particularly when a business hasn’t been handed over in a clear way,” he said.
And when relationships sour, they can go bad spectacularly.
Hammonton’s A.R. DeMarco Enterprises Inc. was one of New Jersey’s largest landowners in 2003 when it sold much of its blueberry and cranberry interests amid acrimony and lawsuits among its three sibling owners.
Alleging corporate mismanagement, sibling Mark DeMarco sued his younger brother, J. Garfield DeMarco, and sister, Anna Papinchak, in 1994 and again in 2003 when he tried to block their sale of 10,000 acres of cranberries, blueberries and forest to the New Jersey Conservation Foundation for $12 million.
J. Garfield DeMarco, 74, of Hammonton, said the conflict started when their father, Anthony DeMarco, was killed in a car accident in 1964 that left his family with no plan for dividing the estate.
J. Garfield DeMarco, a Fulbright scholar, was pursuing a career in labor law, having clerked for Teamsters leader Jimmy Hoffa after graduating from Yale Law School. But with his father’s death, he decided to look after his ailing mother and put his energy into the family berry business.
The three siblings formed an operating company that leased and eventually bought their father’s business interests from their mother. J. Garfield DeMarco said his older brother, Mark, a lawyer who lived in Hammonton, was never interested in the company’s day-to-day operations. Their sister married and moved to the West Coast.
“You have one person doing all the work and the other claiming the goodies,” he said. “All he could think about was grab, grab, grab. My brother was furious because he always was outvoted by me and my sister.”
J. Garfield DeMarco bought more land and eventually expanded the cranberry operation’s annual yield from 12,000 to 160,000 barrels per year. But the company never had any clearly defined roles or expectations for its three sibling shareholders. That led to escalating friction.
Buying out his older brother was not practical, J. Garfield DeMarco said.
“It would have set off a big war,” he said. “You can’t imagine a member of your family suing you or turning against you.”
The siblings settled the 1994 lawsuit. The second went to a nonjury trial that found in the defendants’ favor.
Today, the former cranberry and blueberry operation in Woodland Township, Burlington County, is known as the Franklin Parker Preserve — a sprawling mix of marsh and woods that J. Garfield DeMarco considers his legacy. Mark DeMarco and Anna Papinchak have since died.
J. Garfield DeMarco said his family’s experience illustrates the awkward conflicts that sibling business owners can face.
“The whole situation has made family a dirty word,” he said. “Anyone who has thoughts about going into a family business should think it over very carefully.”
That is sound advice, said David Karofsky, who counsels family businesses on their structural organization for his Transition Consulting Group based in Framingham, Mass.
“They can be incredibly advantageous. They generally are in agreement over the importance of family and the business to the family,” he said. “Siblings are often, but not always, in sync. They understand that perspective.”
Karofsky knows the pros and cons of family businesses firsthand. He runs the consulting company with his father, Paul Karofsky.
The key to forging a strong business while keeping family loyalties intact is to formalize the business relationship by drawing up legal ownership or incorporation papers, he said.
“The idea that blood is thicker than water is very true. I trust my father more than anyone in my life apart from my wife. He always has my interests and the business’ interests at heart,” he said.
Even so, they drew up a formal partnership with terms spelled out in case one died or wanted out of the business, he said.
“If something happens to me, my father has to buy my wife out. If something happens to my father, I have to buy my mom out,” he said. “When you start to bring spouses and in-laws into the equation, it can really complicate the relationship.”
Karofsky said siblings need to communicate and manage expectations about the roles and responsibilities each will play in the business.
After seven years, the Davis brothers have seven employees and are building a new workshop and offices on the Black Horse Pike in Egg Harbor Township.
Officially, older brother John Davis is president. Chris Davis is vice president.
“There’s the good and bad,” Chris Davis said. “The bad is you’re still siblings, so there’s a lot of arguing. When you’re partners with your brother, you don’t filter anything.”
Still, the two said they mostly agree about business matters and are in sync about their expectations of each other.
“I think it’s easier to work with your brother,” said John Davis, 45, of Egg Harbor Township. “Our biggest argument during the day might be where to go for lunch.”
The brothers formed a strong alliance while working for their father. They often found they sided with each other over decisions by their father.
“By that point, we were already tortured,” John Davis joked.
Now, the two said they play off their strong points.
“I’m better at dealing with customers,” Chris Davis said. “He’s better at running the job. I’m talkative, customer-friendly. He comes out, and he’s more serious about getting the job done.”
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