Unlocking the Potential of Family Businesses

Family businesses are a cornerstone of the global economy. The 500 largest family enterprises generate $8.8 trillion in revenue and employ 25.1 million people globally¹. 

Business success across generations requires more than scale and longevity—it demands disciplined governance, clear goals, family harmony, and leadership that evolves with time. 

To drive growth that endures across generations, families can strategically leverage urgency during succession planning, build out governance like a public corporation, foster family harmony through communication, and ensure decision-making aligns with their family values. Goldman Sachs curated these key points to unlock the potential of your family business, based on observations and ideas from seasoned family business owners.

1. Urgency can be a foe—and friend—for succession 

Urgency plays a powerful role in family business succession—but its value changes depending on timing. When families delay business succession planning, the abruptness of choosing future leadership can lead to rushed decisions, business disruption, and potential conflicts among family members. In fact, only 57% of families have a succession plan in place, even though 85% agree that one is critical for long-term business success².

Early planning can allow families to make thoughtful decisions, give leaders time to develop skills, and fosters family trust and unity—as leaders are deliberately chosen for readiness not circumstance. 

Once the transition is complete, however, urgency can become a powerful ally. When Adriana Cisneros was stepping into the role as CEO of Cisneros, her family’s 96-year-old media company, she made several changes to help align the company with her own long-term goals and vision, including a restructuring and expansion of its digital media presence. 

Cisneros encourages future family business leaders to seize the momentum of succession and tackle the challenging work of innovating an enterprise right away. “Try to do all of the really difficult work right at the beginning, before you lose a sense of urgency or simply find a way of coexisting with things you know are not right,” she says. 

One of those early priorities may be establishing a leadership team. While new executives may feel pressure to prove their expertise and command of the business, Bill Armstrong, CEO of Armstrong Oil & Gas, takes a very collaborative approach to leadership. “I have never been afraid to hire people smarter than me,” he says, explaining that success doesn’t stem from one individual—it’s a team effort. This synergistic mindset can help executives bring in talent that complements and builds on their own skills, resulting in a stronger, more resilient organization.

2. Governance: Think like a corporation, not a startup 

Family businesses can sometimes get stuck in startup mode, when they should be thinking about evolving their governance model to align with present and future operations. 

In the early days, many families may have developed very informal ways of governing: You’ll do this, I’ll do that. Over time, and as a company grows, it’s important to formalize responsibilities and decision-making to promote clarity and minimize conflict, especially as younger generations step in to lead. 

“The operating model for a startup is not the same operating model for a billion-dollar enterprise,” says Josh Gentine, president and founder of Bench Consulting and third-generation owner and board member of Sargento Foods Inc.

Families can benefit from having a formal process of how to bring new family members into the business and a document that outlines the distinct roles of all business stakeholders. The most used document in the Berstein family’s governance toolkit is a simple list of responsibilities for family shareholders, the board, and management. “We’re very clear about who is responsible for what to ensure that no one is stepping on someone else's toes,” says Jason Berstein, president of Nixon Medical.

3. Communication powers family harmony—and ultimately business success

With so many different personalities and communication styles, it can be hard for families to communicate well and for members to feel heard. Families can explore formal, objective strategies that encourage dialogue across generations including: 

• Setting up regularly scheduled family meetings as well as a family and executive director session before every board meeting
• Bringing in a facilitator to a family retreat to lead individual and group discussions 
• Engaging the chair of your independent fiduciary board to speak with shareholders individually

“Communication is crucial for trust and connection,” says Gentine. “Family shareholders who know each other, trust each other. It’s a lot easier to get business alignment when there’s trust.” 

Families who are genuinely curious about each other can gain powerful insights on family dynamics and what each person may need to work on to foster harmony, trust, and shared accountability.

4. Public or private? Your family values can be a guide

For some family enterprises, an IPO or business exit can feel like a natural next step. A survey of 300 family businesses found that 15% are interested in eventually going public or selling the business outright³. 

But a liquidity event is not the only option for growth. For some families, staying private offers greater alignment with their long-term values, operating style, and strategic priorities.  

Staying private can present its own challenges, such as more limited capital and reliance on private investors, but companies can still find ways to grow deliberately. This type of ownership can also help deepen a family’s commitment to future generations.

“The beauty of being a privately-held, multigenerational company is you don't think just in quarters or even three-year or five-year plans,” says Jonathan Coors, CEO of CoorsTek, when explaining why his family decided to keep the company private. “As multigenerational leaders, we’re thinking 10 or 20 years out. What do we want to set up for our children, the next generation of leadership?”

If a family decides that going public or selling their business is the right path forward, there are a number of wealth planning strategies that can help them navigate a business exit.

Ultimately, whether the family business is public or private, focusing on a few key priorities can help drive multigenerational longevity. “If you have a great product and brand, and you really care about excellence, you’ll be able to weather any highs or lows,” says Armstrong.