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The Family Wealth Sustainability Toolkit: The Manual by Fran Lotery, Fredda Herz Brown

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CHAPTER 3

Governance Structures and Processes: Helping Families Achieve Goals

Building a sustainable family enterprise is a special achievement that families share and can take pride in. Yes, it takes work and careful attention, but the payoff is tremendous. The bonds of connection and shared legacy lay the foundation, the roots for sustainability. Governance is the next step. It lends organization to nurture those roots, enabling them to flourish and adapt to changing conditions over time. Putting in place an effective structure to help organize family dynamics and decisions is a step most families aspiring to sustainability will eventually want to take.

In this chapter, you will learn about:

  • Creating a representative governance structure that will enable the family enterprise to achieve its mission and goals
  • How governance can resolve problems of trust and connection
  • Formulating explicit and shared agreements about family assets
  • The importance of defining liquidity and exit options for family members

Any family unit—even if not an enterprise—has some informal structure operating among its members, some implicit structure for making decisions. But for families that share assets, the need for a more formalized, explicit structure usually becomes obvious over time. Those who share assets will want a fair and orderly way to make decisions, consider opportunities, and deal with risks. Governance helps to manage the personal dynamics that can be both a strength and nemesis of a ...

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