The conversation most family business owners avoid. 

Most family business founders put off succession decisions, with their teams and their families. We all believe in our immortality, until we don’t or we are terminated by events beyond our control.

This article is not focused on business succession but rather on the thorny issues of family wealth and family business ownership succession.

Firstly, and we all know this, families are different to business partners and senior executives that you may have spent as much or more time with than your families. You have picked your partners and executives, they and you can unpick them with relative ease.

Blood, however, is thicker than water. Your father will never stop being your father until he dies and your child will be your child until you die. Brother and sister will be brothers and sisters to each other for their entire life. Through that journey, all pick up and harbour love, resentments, perceptions and assumptions about each other that are hard to shake, and may not even be real, but are real to them.

No matter how the journey has been with your family, no matter what negative stuff may have accumulated, it is never too late to have the conversation, and it is conversely never too early either, but the early conversations carry a different set of risks.

Why do we avoid these conversations? 

The reluctance to discuss money matters openly isn’t surprising. Money conversations in family businesses blend complex financial considerations with deeply personal family dynamics. They touch on mortality, fairness, competence, and values. In short, bloody hard and highly emotional discussions for all involved.

Some parents think that telling children what their wealth is will risk killing their children’s ambition, turning them into trust fund kids. Most G1 (first generation) wealth creators made it by aspiration, and to kill that in their kids is a risk they wish to avoid. The kids, of course, will likely think that the things their parents were ambitious to achieve are not for them. We all have different ambitions, at least at the margin, once survival and security are achieved.

For many business founders, discussing what happens to a family business after they’re gone feels like relinquishing control, or worse, they fear rejection. What happens if the kids say, “Dad, you wasted your life, we hate the business, we resent that it took your life, and we have no intention of having anything to do with it. Frankly, we don’t even want to own it, let alone run it!” What if one of the kids is running the business and, if you are lucky, really wants to do so, but the siblings resent that child and are intent on making it hard? Having that come out in your lifetime is never much fun.

So why do we avoid these conversations? Good old common garden fear.

These fears echo across countless family enterprises, where the business represents not just livelihood but identity and legacy.

The irony is clear: founders dedicate their lives to creating wealth and opportunity for their families, yet rarely create space to discuss how that wealth should flow through generations. The result? Family wealth rarely survives two generations, let alone three.

Four essential conversations  

Successful family business transitions don’t happen by accident. They emerge from a series of deliberate, sometimes difficult conversations that ideally begin years before any planned transition. Here are the four most critical discussions wealthy business families must have:

Conversation 1: The preparation to create awareness.  

Start with conversations around what you do each day, tell them stories to demonstrate behaviours that worked in the business for you, make the business interesting, challenging and fun. Try to distil the values that will sustain your kids when you are not there; this can start at a very young age.

No amount of wealth will make them happy, independent, or free. Only life skills and attitude will do that; teach them these by weaving in the business stories.

Then as they develop a sense of the challenge and have the values and life skills, give them some information on the businesses and assets, one mouthful at a time.

Try to emphasise the privilege and responsibility, the joy of creating great outcomes for others as a route to great outcomes for the family. Avoid seeding entitlement discussions; don’t talk about distributions, income or individual wealth at this stage, talk collective.

Then move on to details. Give them some awareness of what the family owns, what each enterprise does if there are many, who the people are, why they are important and what the overall scale is. Again, one story at a time, not too much at once. 

Then pull it all together as if you were the CEO/Chair of your family and report to them formally each year. They most likely won’t read it immediately, but recording in detail your decisions and asset and wealth journey in an annual report to your shareholders, your family, is an interesting exercise.

If, as is usually the case, a family’s assets are exotic and/or illiquid, which inevitably a family-operated business will be, reporting to your family requires you to be a bit dispassionate and realistic in valuing these assets. Consistency is also important in how you value various assets. Establishing a valuation and reporting methodology will be important for the children to sense the value journey as it emerges and also to understand what drives value.

Conversation Two: Understanding value. 

Many family disputes originate in widely divergent perceptions of business/asset value. Particularly if the assets are being shared around and separated among the family. 

While an external advisor on values can help, it is not a panacea. Low values are rarely accepted by sellers and high values are not usually accepted by those who are expected to pay them. 

Begin by establishing a shared understanding of what the business/assets are actually worth—not just its sentimental value but its market value based on multiple rigorous methodologies. This conversation should cover:  

• Current business valuation using multiple approaches (asset-based, market-based, income-based)  
• Who currently owns shares or interests in the business  
• Who expects to own shares in the future  
• How ownership might be transferred (gift, sale, earn-in), or if it is to be retained as a family-owned business across the whole family, how that might occur  
• What ownership actually means in terms of control, economic benefits, and responsibilities   

The goal isn’t determining final answers but creating a foundation of shared understanding. When everyone operates from the same set of facts, emotional reactions diminish, and productive planning becomes possible.  

Conversation 3: Capability and contribution assessment  

Perhaps the most sensitive conversation centres on family members’ capabilities and contributions to the business. While family harmony might suggest treating everyone equally, business reality often demands recognising differing contributions.

This is no different to running a company. Everyone will have roles or no one will. Actually asking the children what they want to do and how they want to be involved is the starting point.

If they want to run the business, the first question is to what degree? 

Do they just want to be owners, and do they know how to be good owners? Or do they want to be governors (directors)? Do they know what the responsibilities of that are, and will they be good at that? 

Or do they want to be the CEO, or have some other role in the business?

 If they are willing and capable, then they need to be rewarded. This is where the other kids can cut in with envy and believe that their sibling should do it for an equal share as did Dad or Mum. No child wants to become their siblings’ parents, so this will take real care.

This conversation should candidly and commercially address:  

• Who works in the business and in what capacity  
• How performance is measured for family members and how they are held to account  
• Whether family members are compensated at market rates  
• Which family members could potentially lead or govern the business  
• What development paths exist for interested family members  
• How non-participating family members might benefit  

For people to stay together, it has to be rewarding, and they must have freedom and choice. To achieve this, a partial sale to external parties may be required to generate passive assets for distribution or diversification. 

To have that freedom and choice, your children will need to develop their own skills and travel their own paths for a period. A child’s CV that only has work in the family company on it is not a credible CV to non-family members. The doubt is always: “Is this person really any good? They only worked for Daddy.”

So encourage your kids to get out into the world independently before they assess the family company. It’s a risk, of course. They may find happiness elsewhere. But with diverse experience outside the family, they at least have a chance of being good governors. This also delivers the best diversity of thought and opportunity for your collective family interests.

The framework should balance fairness with the recognition that different roles contribute differently. Distinguishing between ownership (who has shares), who governs (directors) and leadership (who makes decisions) often provides a helpful separation that honours various family contributions.

Conversation 4: Wealth philosophy, purpose, and performance

The next thorny conversation addresses how family wealth—both business and non-business assets—should flow through generations. This discussion goes beyond technical trust structures to examine fundamental family values around wealth. Key questions include:  

• What is the scale of the opportunity and are we stronger together or apart? If together, why? What are our expectations and what is our collective purpose?
• Should wealth be divided equally among children and/or grandchildren?  
• What responsibilities come with inherited wealth?  
• When should younger generations receive or share control of assets?  
• What family legacy goals exist beyond individual enrichment?  
• How much is ‘enough’?
• If there is ‘too much’ (the converse of enough), what role does philanthropy play and what form does that take?  

The output of this is the development of a family constitution that establishes a philosophy around wealth. It will define how the pool is governed and its purpose.

The second output is a statement of expectations, i.e., how much will be distributed, how it will be done, and this in turn will drive a performance metric assessment to ensure that the family’s distribution expectations are met.

The blending of family purpose, values and expectations tends to be documented in a Statement of Performance Objectives (a SIPO).

Starting the conversation  

How do you begin these difficult discussions? The first two conversations above, in business speak, are ‘inform’ so while it needs to be planned, external help operationally is probably unnecessary. The last two are at the sharp end of the RACI model, the ‘responsibility accountability’ end. With that, external help will likely be useful. 

Use a neutral facilitator: An experienced family business advisor can guide conversations, diffuse tension, and ensure all voices are heard. Their objectivity helps maintain focus when emotions threaten to derail progress.  

Create a structured process: Conversations should follow a clear agenda with defined outcomes. Ad-hoc discussions about sensitive financial matters rarely produce constructive results.  

Start with values, not valuations: Explore shared family values around work, money, and legacy before diving into technical details. When families align on fundamental values, technical solutions emerge more naturally.  

Separate forums from family gatherings: Designate specific times for business discussions rather than allowing them to overtake holidays or celebrations. A family meeting might precede or follow a family holiday, but it shouldn’t replace it.  

Document outcomes: Capture agreements in writing, whether through formal family constitutions, meeting minutes, or memoranda of understanding. Written records don’t prevent relitigating settled issues, but they help provide clarity for future reference.  

The cost of avoidance  

Without clear communication, assumptions fester, resentments build, and the business itself suffers from indecision or conflicting priorities.  

What happens when the founder of a thriving business suddenly becomes incapacitated without having prepared family members? The business lacks clear leadership, family members scramble for control, and customer relationships suffer amidst the internal chaos.  

Or consider siblings who inherit equal shares of a business despite dramatically different contributions to its success. The dedicated sibling who built their career within the company resents sharing profits equally with siblings who pursued other interests. The non-involved siblings, meanwhile, push for maximum dividends while the business requires reinvestment for growth.  

These scenarios occur daily across New Zealand, creating family fractures that sometimes never heal.  

Towards a meaningful legacy  

Family businesses represent more than financial assets—they embody values, traditions, and purpose that can strengthen families across generations. Thoughtful financial conversations, begun early and revisited regularly, change wealth from a potential source of conflict into a shared legacy that benefits both family and community.  

The most successful family businesses create spaces where money discussions become opportunities to express care, reinforce values, and build stronger connections. Rather than awkward topics to avoid, financial conversations become powerful tools for family cohesion and business continuity.  

Ready to have these essential conversations?  

Contact Bruce at Gilligan Sheppard to learn how we can help facilitate productive family money discussions for your business. Email bruce@gilshep.co.nz or call +64 9 309 5191 to take the first step toward securing your family’s financial future.