In Family Businesses, the Ties That Bind Often Break : While the firms that survive are likely to be hardier and more successful, internal conflicts frequently lead to painful break-ups.

Just another roach exterminator to you maybe, but to owner Herbert Pencille, Hydrex Pest Control of the east San Fernando Valley is a generational saga. Get past the antiseptic name and the firm’s unpleasant but necessary function, and you’ll uncover the dreams of Pencille’s grandfather, the untimely death of his father, and a turning point in his own life, when, at 22, a calamity left him in charge of the company.

So it’s natural that Pencille, 68, would have asked both a son and a stepson to take over the North Hollywood franchise and carry it on through the fourth generation.

Natural, too, is the disappointment he felt when both declined.

The fact is, Pencille was already beating the odds. Efforts to keep businesses within a family usually fail. It’s believed that less than a third of family businesses that are passed on make it past the second generation, said Judy Harman, associate director of Cal State Fullerton’s Family Business Council. Only about 5% survive to the fourth generation, according to a study by Massachusetts Mutual Life Insurance Co.

Despite this, the temptation to mix loved ones and business remains strong. Most businesses are family businesses. For small firms, family involvement gives the business a heart and fuels devotion to the tough and dreary work it sometimes takes to stay afloat. But as Pencille also found out, the thread of family ownership is fragile even when it’s long. Children leave. Siblings fight. Routine decisions are complicated by old hurts.

In the San Fernando Valley, a generation of post-war entrepreneurs--founders of the Valley’s commercial base--are reaching retirement age. A whole new assortment of sons, daughters, in-laws and issues are on deck.

That’s meant lots of business for Lee Hausner, a Burbank family-business consultant who is also, significantly, a clinical psychologist. Hausner calls these elder founders “cowboys” and says they have different values than business-school grads and heirs-apparent coming in. “It’s often a very bumpy transition,” she said.

Pencille says he’ll probably sell his pest control company. Whoever buys it, though, is unlikely to share sentiments handed down through three generations. When Pencille’s grandfather got started in 1908, pest control was a matter of holding one’s breath while stirring noxious mixtures of sodium cyanide and sulfuric acid in buckets. When Pencille worked in the business as a child, cyanide gas was still used. It worked fine, as long as you hustled, he said. “You had a minute or two to get out the door. . . . It was kind of exciting.”

This was the gas Pencille’s father was using in 1947 when the house he had just fumigated exploded--probably after being struck by lightning. Chester W. Pencille was in a coma for months and died two years later. Young Herbert Pencille built the business back from financial ruin: At one point, he was forced to close its doors, but immediately started it up again with a new name.

But by the time it was his own sons’ turn, things had changed. One son, Brian Pencille, worked for him for 20 years before breaking the news that he didn’t want to stay. Pencille says he’s not angry. But added: “It was kind of a shock.”

“I feel sorry that I let him down, but I have to make my own decisions in life,” said Brian, 42, who is now starting his own window-cleaning firm in Grants Pass, Ore. He said he’s grateful to his father, but was tired of Los Angeles, tired of pest control and wanted to do something else.

Giving up control to a stranger can be hard, but keeping a business in the family can be harder, said Steven Gal, an associate professor at USC and director of the university’s Family Business Program. Typical patterns include an elder founder reluctant to turn over the reins, overzealous spending by the heirs and, especially, squabbling between siblings, who often find it harder to work for each other than for parents.

“It’s like a bad marriage,” said Todd Dillmann of his relationship with older brother Craig Dillmann. No parents are involved in their business, Canoga Auto Body Inc. in Canoga Park, just two brothers who don’t get along. “I have to sit next to him all day; I don’t like going over to his house any more,” added Todd, 35.

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Craig, two years older, concurs. His brother differs from him in business matters as well as personal. “If he was just an employee, you could tell him to do whatever you wanted. With your brother, you have to be more cautious,” he said.

Despite these gripes, the Dillmanns’ auto body shop is booming. The brothers started doing the work in their parents’ garage--Craig did the body work; Todd painted. Their 6-year-old shop now has about 24 employees and yearly revenues are around $2.5 million. They recently expanded, and the phone rings constantly. Key to making it work, by both men’s account, is Craig’s wife, Juanita, official part-time receptionist and unofficial peacekeeper. When decisions come to a vote, its usually Juanita who breaks the deadlock, often siding against her husband, the brothers say.

At Art’s Delicatessen & Restaurant in Studio City, holding the family business together has required not just the help of a lawyer and an accountant, but a therapist as well. Founder Art Ginsburg, 60, said counseling sessions have helped him, wife Sandy, son Harold Ginsburg and daughter Roberta Mitteldorf resolve problems he said arose from power struggles and sibling rivalry.

“There’s a fine line there--in working together but not being the parent and not being the child,” he said. “Your roles reverse back so frequently and innocently you don’t even realize it’s happening.”

His daughter, Roberta, 29, said conflicts still come up. There was that bit with the pickles, for example. Roberta had time off work, and someone--it wasn’t clear whom--changed the spice recipe for the pickles, an area Roberta considers her responsibility. “I tasted the pickles and said, ‘What happened here? I’ve only been gone a month!’ ” exclaimed Roberta, who changed the recipe back. Trivial perhaps. But the recipe switch left a shadow long enough for both father and daughter to mention it independently weeks after the fact.

“It gets a little claustrophobic,” said her brother, Harold, 34. “There are sources of tension that wouldn’t be there if we didn’t work together.”

Personality and generational conflicts can also lead to improvements. Art Ginsburg said his children have modernized his business. Roberta and Harold have insisted on staying open later, adding wine to the menu and offering Chinese chicken salad instead of just chef’s. Some innovations, such as low-fat cream cheese, would never have crossed Art’s mind.

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Same goes for Canoga Park Heating & Air Conditioning Co. Founders Bob and Mary Wiseman are in the process of handing over the business to their sons. The couple were self-starters who began the business in their garage. Their son, Bob Wiseman Jr., went to college, traveled in Europe and got an MBA from Pepperdine University. One family. Two worlds.

“Bob said we have to have a fax machine. I said, ‘What’s a fax machine?’ ” said Bob Sr., who adds he now has learned to like the contraption. Bob Jr. and his half-brother, Scott Davis, also argued for purchasing phone mail and introduced computers, recently upgrading them over their father’s objections. “The computers are really good, it’s just hard for my husband and I to accept them,” said Mary Wiseman, 64, who did the bookkeeping by hand for decades. Bob Sr. demurs. “I can accept them. I just can’t use them,” he said.

Gal, the USC professor, said families in business together must learn to talk openly, or else. After that, they can tackle the common disputes, starting with how and when to spend money and who gets paid what.

At Minuteman Press in Woodland Hills, Jerry Lash says his wife, Hope, and son Steven, 28, have learned their lesson from eight years in business together. “We have made a rule that we can interrupt each other at any time to discuss a problem,” he said. Lash said the business is better for it: “A family that works together has to resolve problems. If you are working with strangers, you can just carry your animosity around.”

Another challenge is ensuring successful transitions from elder family members to younger, Gal said. In some cases, such as Pencille’s pest control company, selling the business is the best option for everyone involved. But if owners intend to keep the business in the family, they should take precautionary steps, said Gal, who advises writing a succession plan, setting terms and an exact date for the founder’s retirement, and settling the division of pay, assets and authority to everyone’s satisfaction well ahead of time.

Despite difficulties, family businesses tend to be more competitive, more ethical, more devoted to community service, and more considerate of employees than non-family businesses, experts say. “When they don’t work, it’s the most distressful situation imaginable,” said psychologist Hausner. But when they work, “they’re the best.”

That’s true on a personal level as well. Although most of the family members interviewed here complained of feeling stifled and frustrated occasionally, nearly all also said they were basically happy.

And no wonder. Consider Mr. B’s Flowers in Canoga Park, founded by Lorraine Hasson, 62, and her late husband. Today, her daughters, Beverly Ing and Yvonne Green, manage the shop. Hasson does the bookkeeping, and both daughters’ husbands work there.

Many working parents might envy the setup this family enjoys: When Beverly Ing’s son, now 16, was born, she didn’t worry about day care. She simply hauled a crib into the shop and went to work. Nowadays, schedules are arranged around Little League games. Lorraine Hasson says her friends tell her she’s lucky to see her kids so much.

At Art’s Delicatessen & Restaurant, Roberta Mitteldorf’s 2-year-old daughter and 6-week-old son accompany her to work. She nurses the boy while taking orders on the phone and hands him to her father to burp when she’s off doing something else. “I didn’t know this is where I was going to wind up, but now that I have done this, I couldn’t see myself anywhere else,” she said.