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Governance
Before you say yes: Five lenses for effective family due diligence before joining a family business board
Published February 5, 2026 in Governance • 10 min read • 
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Joining a family business board requires more than financial due diligence. Directors must assess family power, ownership dynamics, values, and influence before saying yes.
Joining the board of a family business is one of the most rewarding and underestimated experiences a director can have. Far from the stereotype of slow-moving, insular organizations, many family enterprises are bold, deeply values-driven, and able to take long-term bets other companies would never dare taking.
While too many directors shy away, assuming unpredictability or a board that rubberstamps, we argue that family business boards offer the opportunity to bring forward your best soft and hard skills as a director. Aspiring family board directors, however, need to do an additional type of due diligence that goes beyond the firm and its board. We call this “family due diligence” and we suggest there are five important aspects to cover in your family due diligence process before you accept to join a family business board:
1 – Understanding the real hierarchy of family power
Many new directors are surprised to discover that the formal organization chart rarely reveals where decisions are truly made. The influential grandfather who “no longer runs the company,” but still approves every major move; the sibling whose informal authority outweighs their title; or the cousin in accounting who is keeping an eye on the finances on behalf of the family.
Family business models suggest an evolution of family roles over time, where some family members in next generations are active in the business while others are merely owners. These roles may not always be crystal clear. Lines of authority may be blurred and seniority in the family can interfere with corporate hierarchies. Owners without any formal role in the business may interfere in operations (often pulled in by executives or employees seeking to shortcut their hierarchy) or turn up for board meetings.
Future board members should therefore ask about the process of decision-making from beginning to end and probe who is involved in each step, specifically following up with questions on family member involvement. In countries where seniority matters, family CEOs may find themselves fulfilling requests from uncles and aunties that distract from strategic priorities. Moreover, it is not unusual for next generation CEOs to seek parental permission for impactful corporate decisions. They may also be discrete and stay out of the limelight out of respect for their parents’ legacy.
Take for instance UOB, the Singapore-based bank. Wee Cho Yow, a revered figure in Asian business circles, led the bank for 60 years. He retired as Chairman in 2013 to become Emeritus Chairman – while remaining influential until he passed away in 2024 at age 95. His son Wee Ee Chong, CEO of UOB since 2007, only stepped (somewhat more) into the limelight in the last few years, having always respectfully allowed his father to remain the trusted face of the bank.
2 – Identifying the trusted family advisor
Corporate titles can be misleading in general, but even more so in family businesses, where trusted executives or long-time advisors often carry more weight than their titles indicate. A CEO may exist in name, while a long-serving COO or CFO is effectively running the show. In some cases, loyal staff carry the institutional memory and make day-to-day decisions while the “formal” CEO focuses on family alignment. Trusted “consiglieri” may not even have a formal role in the business: it could very well be a family advisor who acts as a behind-the-scenes veto or sounding board. Early-days employees are consulted for all major decisions. Directors should learn who truly leads operations, who sets the tone, and who has the trust of the workforce and the family.
An early indication can be to notice who is involved in the board recruitment process and who is in charge of the pipeline generation and first round interviews. Prospective directors would also be wise to take time to ask about the early days of the company and who remains in executive positions from those times. Executives or advisors serving on multiple boards of the company’s group or subsidiaries can also be signals of behind-the-scenes influence.
For example, in France, at the Pinault holding company Artemis, the trusted advisor Patricia Barbizet has for many years been the leading and outstanding voice in most strategic decisions, not only for the holding company but also onboarding for the major operating companies, from Fnac to Printemps-Redoute or even operationally as she assumed the role of CEO of Christies after the acquisition. When the next generation rose to power, that structure collapsed and was replaced, which for a director would entirely change the governance landscape. Directors must identify who holds symbolic authority, who holds operational authority, who has voting power, and who holds emotional authority. Without reading this power map accurately, oversight becomes guesswork.
“Family businesses often operate through complex webs of entities.”
3 – Making sense of the family’s corporate maze
Being an entrepreneurial family generates new initiatives. Family businesses, especially those in emerging markets, often operate through complex webs of entities. Research on family businesses in emerging markets suggest that they often come in the form of sprawling groups, with intra-group transactions that can benefit one company over another. In emerging markets especially, group structures can be stacked, opaque or evolve organically over generations. Board members of one company need to understand what happens elsewhere in the group to grasp the full picture. Only then will they decode how geography shapes legal exposure and map the flow of contracts, obligations, and guarantees across the group to understand risk pockets and the impact of related-party transactions.
One family due diligence action is to ask executives to walk through the entire group’s legal and ownership structure. This analysis will help understand related-party transactions, risk exposures, and capital allocation arbitration. Directors must insist on a clear map: what the family businesses are, how they connect, where money actually flows, and what governance has been put in place to ensure minority shareholder interests are not compromised. When access is possible, a discussion with the external auditors of the company can be a good place to start.
For instance, the family-run Benetton company in Italy has long complemented the historic knitwear fashion business with more profitable alternative businesses by diversifying through its holding company, Edizione S.p.A., in real estate and transportation infrastructure. As those businesses are expected to subsidize the traditional retail unit, directors need to understand that strategy is about the family name and reputation and that the family maintains a strong emotional link to the original business. This combination of businesses entails unique risks, in particular where related party transactions are concerned. Another example of risks for board members can be found in the case of Indian publicly-listed media company Zee, whose owners (called promoters in India) have faced financial distress elsewhere in their Essel Group. Indian media reported in February 2024 that two former independent directors of Zee were summoned by the regulator over alleged funds diversion from Zee to other companies that were privately owned by the promoter family.
A visit to social media profiles of the family members, especially the new generations, provides usually valuable insights.
4 – Testing if family values are lived or laminated
Research suggests that families have a strong emotional connection to the company, sometimes referred to as “socioemotional wealth.” Very often, the family legacy manifests itself in terms of strong family values. Those values are invariably a source of family pride and commitment and guide how decisions are made by the board. They are also likely to be a selection criterion for board members.
A question an aspiring director should ask is how those values show up in the operating companies’ daily decisions, leadership behavior, customer relationships, and governance disciplines. How are family values used to guide trade-offs? Another area of due diligence is to ask how the family values are lived by management. Is the remuneration system for family and non-family members aligned with these values? Are they applied consistently, even under pressure or in crisis situations? Are family members leading by example? A visit to social media profiles of the family members, especially the new generations, provides usually valuable insights.
For instance, Princess Auto (a Canadian family-owned retailer specializing in tools, equipment, industrial supplies) is characterized by a lasting and deep commitment to taking care of its people, a legacy that traces back to founder Harvey Tallman’s belief that a business succeeds only when its employees thrive. Over decades, the company has built a reputation for treating “team members” like family. In the early 1990s, it set up a profit-sharing long before it was common in retail, even though advisers recommended keeping compensation costs tight during rapid growth. Throughout the years, it invested heavily in internal promotions and created one of the most generous training and development cultures in the sector. Empowerment of employees is not merely an empty phrase: shopfloor employees have direct decision power over pricing of the products in the stores and are all involved in the interview process to hire their bosses. When the company faced strategic pivotal moments, such as closing its manufacturing arm in the 1970s, it made a point of redeploying employees whenever possible rather than resorting to layoffs. Even during economic downturns, Princess Auto prioritized job security, continuing to provide benefits and support programs designed to help employees weather uncertainty. This long-standing philosophy has helped the company maintain exceptionally high loyalty and has become a defining feature of its identity as one of Canada’s most people-centric family businesses. Board members, needless to say, need to take such values as a starting point in strategic decisions.
5 – Assessing early the owners’ group alignment or fragmentation
Behind every family business sits an owners’ group that may be fully united, or quietly fractured. As an independent director, fragmented ownership always represents a new complexity as situations will arise when they are the ones tipping the balance of a decision that might polarize the family. Family business scholars recognize that family businesses evolve from simple founder-led entrepreneurial entities to sibling partnerships, cousin consortia and then large family groupings. Each phase comes with different challenges for family decision-making and the larger the group of owners, the greater the potential diversity contained in it.
One way is for directors to explore the level and nature of alignment: how are priorities shared? Are time horizons compatible? Do branches of the family share the same vision? How is the family governed and who takes decisions on behalf of the larger shareholder group? Such questions must probe for the existence and quality of shareholder agreements, a family council and a clear family constitution. A well-structured family governance framework will clarify which decisions belong to the family (values, capital allocations such as dividends, leadership expectations) and which belong to the board (strategy, oversight, CEO performance, etc.). Directors should confirm that these governance mechanisms exist, are current, and are respected. Without them, the board risks being drawn into family debates it cannot resolve and where they would only burn “trust capital” and endanger their credibility. Directors should, when possible, get access to different branches or generations of the family to get a good understanding of the dynamics.
The well-covered family feud at CDL, a large Singapore-based real estate empire controlled by the Kwek family, was a case in point with the details extensively covered in disclosures and in the media. In 2025, Kwek Leng Beng, the executive chairman, wanted to fire his son – the CEO – over what he saw as strategic errors. However, the father found himself outvoted on the board. He protested board changes that saw new directors added to the board, but his quest did not appear to have the support of the shareholders (including the family shareholders). Unclear or diverging voting patterns of family shareholders can lead to considerable uncertainty for board members. On the other hand, the family behind Tolaram Group, with significant operations in Nigeria, formalized its family governance a decade ago. With clarity on ownership and family influence, the roles of family and non-family board members at different levels in the group’s structure are well defined. Family members can raise issues to the family council, which acts on behalf of the wider family group.
By asking these questions upfront, directors sharpen their ability to foresee challenges and ensure an impactful and rewarding board journey marked by trust and mutual respect.
Family due diligence matters
Joining a family business board can be the beginning of a long tenure, where trusted governance professionals sometimes accompany the growth of the business across decades, which may include helping the passage of the baton to the next generation. Therefore, it is crucial that next to corporate due diligence, aspiring board members of family businesses engage in another type of due diligence, which we have called “family due diligence.” This involves asking questions regarding where the real power lies in the family, who are the trusted people that have a significant voice, what other companies the family owns and how these relate to the focal business, what are the values of the family and how are these values lived in the company, and finally what governance the family has in place to organize the owners’ dynamics. By asking these questions upfront, directors sharpen their ability to foresee challenges and ensure an impactful and rewarding board journey marked by trust and mutual respect.
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