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A company that is owned and/or actively managed by a family involving two or more family
The founder or founding family or their descendants hold majority decision-making rights
in the business.
Family Businesses come in all shapes and sizes, from small local businesses to large
multinational corporations, and can be organized as partnerships, corporations, LLCs, or
The founder and the family are committed for long-term perpetuity of the business and
At least one representative of the family or kin is formally involved in the governance
of the firm.
One commonly observed trend in family businesses across
the globe is:
Establishing family governance structures like family council and family constitutions
or charters to address family expectations and manage various risks pertaining to
succession, wealth management, and family togetherness/ unity.
Forming independent board of directors to provide oversight, bring diverse perspectives,
and contribute specialized expertise.
On-boarding non-family, professional managers for improving operational efficiency,
strategic decision-making, and bringing fresh outside-in perspectives.
Embracing technology to transform their traditional business models and processes to
stay in the league of rapidly evolving markets
Walmart has ensured a balance between family involvement and professional expertise- the
family members hold significant ownership and board positions, while external talent is
hired for key leadership roles.
L'Oréal has implemented a family shareholder agreement and family governance structure.
Bettencourt Meyers family, major shareholders of L'Oréal, has established a family
that oversees family matters and succession planning.
Lego has a family ownership structure and operates under a family constitution known as
"Lego Family Constitution." The constitution defines the family's values,
and principles for the business's long-term development.
Estée Lauder has a family council that consists of family members and external advisors
oversee family governance matters. The Lauder family has developed a family charter that
outlines their shared values, commitment to philanthropy, and guidelines for family
involvement in the business.
They are able to make strategic decisions that put sustainability and consistency before
immediate financial results.
Family members are often deeply committed to the success of the business and go beyond
to ensure its success.
They build strong customer relationships, which tend to enhance customer retention,
while also fostering employee loyalty.
Family businesses can be nimble and adaptable, which allows them to respond quickly to
changing market conditions.
Transferring proprietary knowledge across generations is a unique value proposition.
A sense of family-like culture is fostered among the family business employees, which
can lead to higher levels of loyalty and commitment.
A profound, long-term investment strategy driven by a commitment to sustain the family
legacy. They prioritize multi-generational value creation over short-term financial
gains, offering resilience against hasty decisions that could harm both the company and
family in the future.
The capacity to swiftly rebound from adversity through strategic redundancy, community
investment, and self-sustaining ecosystems. This ensures their long-term success in
volatile and uncertain conditions.