Laying the Foundation for the Cousin Generation to Follow

Abstract

Love and strong family ties can blind some families to future risks. When siblings have trusting and close relations with one another, they often resist setting up formal processes and policies because they do not feel they need to create so many structures and systems to manage their company. After all, they grew up together, work well together, share a profound respect for the company and the legacy of their parents, and are simply very busy running the business from day to day. Sibling-owned businesses may occasionally succeed even when they set up only a few formal structures. Yet, even in those cases where harmony has prevailed among siblings, it’s a new ball game when the third generation starts to come of age and to enter the business. All of a sudden, parental allegiance may trump filial bonds and even harmonious siblings may find themselves in conflict if they feel their children’s future is at stake. As cousins mature, decision-making processes will eventually need to accommodate many more people. Three siblings may perhaps reach joint decisions on the fly, but when there are 17 cousins (who most likely do not all work in the business), new models are essential.