Guide · Insight · 6 min read
Institutionalization in Family Businesses and the Family Constitution
Separating family and business interests and rule-based governance for sustainable growth and healthy succession.
Why it matters
Most family businesses do not survive into the second/third generation; the main reason is unclear governance and roles. Institutionalization separates family, ownership and management roles and makes decision-making and performance metrics transparent.
What is a Family Constitution?
A Family Constitution is a written agreement setting out the family's values, rules for involvement and employment, profit distribution, share transfer and succession principles. It is implemented step by step via a roadmap.
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