How do family businesses typically evolve through generations?
Most family business founders gradually become owner-managers, as the business matures. In this early stage, the founder is the sole proprietor and authority over the business. As the founder’s children become adults, a family partnership forms, loosely at first and more formally as ownership is passed to the second generation. This is called the “kitchen table” stages of family business evolution in reference to the nature of family consultation. Succession of the third generation usually brings a group of cousins with more widely varying degrees of financial interest and management involvement. The natural interaction of the first two generations is often replaced with more formal governance in order to bridge geographic and emotional distance. In the third or fourth generation of a family business, only a minority of the many family who share ownership may be involved in the board or management. The increasingly separate and parallel development of family governance and corporate go
