With more family members, you can expect more complex family issues emerging that will further exacerbate and breed more tension. With any multi-generational transition, you can anticipate tension. All of which are equally red flags that a family business will not last. In fact, if there is no tension, it can mean that family members are passive, incompetent, either not thinking or trying to improve or have no power to assert. When governance is initiated, natural tensions occur as they cannot be avoided. Your action now can help your grandchildren avert not just going back to being part of the “poorhouse” but the ignominy of causing the demise of the family business during their watch.īut to be truthful and fair about the wealth dissipation issue as to which generation caused the demise of the business? The blame lies on the failure or inaction of the first and second generation to initiate governance and succession early. I strongly encourage the patriarch/matriarch not to waste time in pursuing the governance process.

This will only postpone the issue and create bigger problems in the future.

Lastly, if there are differences, they must not be avoided.

Second, after identifying the source, the family with the assistance of a family business advisor, proactively work to ensure that adequate measures are adopted so that those conflicts do not spill over to the other circles (John Davis et. I always reiterate that the first step towards governance is for family members to be cognisant of the major causes of the tension. “Father founder of the company, son rich, and grandson poor” is Mexico’s powerful equivalent to Asia’s popular saying about family-owned businesses, “Wealth shall not last three generations!”Ĭiting an article penned by Lee Iwan, a leading business strategist in Mexico, he avers that the “founder works and builds a business, the son takes over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and pronto an empty bank account.”

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