- A civil war over the family business can start when the founder
doesn’t plan for a transition of ownership.
- Temporary, shifting alliances among family members can work to
your advantage—but they’re not without risk.
- Enlisting the right professionals can make all the difference and separate winners from losers.
The term “civil war” typically refers to a battle between citizens of the same country—the
most obvious example in this country being the War Between the States from 1861 to 1865,
which left at least 600,000 dead Americans in its wake.
But a civil war can also involve family members who are in business together. When a war
erupts between those family members, it can irreparably damage family relationships, the
business itself—and, of course, the family’s wealth and financial security.
Ideally, of course, such conflicts should be avoided—and there are many ways to do so. The
wealth creators or the family members in control of the family enterprise (and the family
wealth) can take steps and even set up contingencies so that family civil wars are avoided—
including succession planning and estate planning. Trusts, for example, can be set up to limit
what family members can do to push others out of the family enterprise.
But let’s face it: Too often, the people who can head off family conflicts fail to do so. People
who find themselves facing a family business civil war must recognize that being clever and
calculating is crucial to emerging victorious. Assembling the right team can also make a
With that in mind, consider how you can position yourself to win if you find yourself wrestling
for power and control of the family company.
What triggers a family civil war?
When a family business has no autocratic authority figure at the helm, the stage is potentially
set for a family civil war. Consider a situation where a number of family members have
equity positions within a business and none of them can make unilateral decisions. Strong
differences of opinion can easily start conflicts. Without resolution, these conflicts can
easily fester and escalate, leading to all-out war.
Likewise, family civil wars can begin when the initial wealth creator dies. At such times,
the family members can go from knowing exactly who is in charge and adhering to his or
her dictates to dealing with a much more chaotic situation. While it may have seemed that
everyone got along quite well during the patriarch or matriarch’s reign, this is often a mirage.
With that person gone, family members often jockey for position and advantages—from
control of the family enterprise or aspects of it to acquiring greater levels of personal wealth.
The value and risks of temporary alliances
Most of the time, what separates the victors from the losers in a family civil war is not a
matter of right and wrong. Winning a family civil war is predominantly decided by who is more
crafty and cunning.
For example, one approach often taken to win family civil wars is to form alliances, which are
often required to push out other family members from the family business. While various
family members might disagree with each other over a substantial number of issues, they
are likely to want to push some other family members out of the family enterprise. Thus, they
will team up— temporarily—to achieve this end.
Example: If two cousins who have issues with each other both are stalwartly opposed to a
third cousin being involved in the family business, they might very well team up to get that
The obvious danger: Once those family members are no longer considerations, these
alliances will likely disintegrate. The two remaining cousins might then go to war with each
other. Ultimately, there will likely be one person—or one alliance—left standing.
Enlisting an army
Another cunning move is to bring in professionals, who are often vital allies in family civil
wars—especially when substantial personal wealth and family enterprises are at stake. The
following experts are commonly used by the Super Rich in conflicts:
• Lawyers tend to be linchpins in family civil wars. They often provide a number of services
and guidance in dealing with other family members and delineating the limits of possible
courses of action. Also, legal documents are always required to address changes in
• Strategists map out the campaign and coordinate resources, including the use of other
• Negotiators are used to develop approaches and insights to help work through and
accept terms between family members. The more that is at stake and the more financial
wealth involved, the more negotiators tend to be involved.
• Accountants accurately keep track of the assets being fought over so they don’t “go
missing.” They are also essential in dealing with valuation issues.
• Bankers are used for raising capital and helping with the mechanics of buying and selling
business interests. They tend to show up toward the end of the conflict.
• Family security specialists are commonly used to protect family members and assets
from the possibility of aggressive actions.
• Communications experts are engaged to protect the reputations and images of family
members while calling into question the intent and stature of the family members they
are in conflict with.
• Wealth planners are called in to help address and structure the family members’ personal
financial world to mitigate possible losses (including managing the tax implications of
various courses of action). Wealth planners are usually brought in early, even before
open hostilities occur. Lining up experts “on the sly” can work to your advantage. Consider the
case of one co-owner of a family business who saw the potential for a battle—the family wealth creator was
very sick—and so engaged experts early and covertly. By the time the wealth creator died,
the co-owner had positioned himself to take control. There were hard feelings, but a full-on
war was averted.
If you win the war
Keep in mind that very few family members who are actively involved in a family business civil
war come out unscathed—including the winners. The victors take their spoils and strive to
rebuild if necessary. The losers take what they can and tend to move on, often while holding
grudges. Sometimes such conflicts end but get rekindled later, to the detriment of most
It is also important to note that family civil wars are not restricted to the extremely wealthy or
even the moderately wealthy. Many family businesses large and small have collapsed due to
major family conflicts. There is the potential for a family civil war in most any family business.
The best solution, as noted, is to take steps early to prevent a civil war from breaking out in
the first place. But since that is not the reality in many families who are actively involved in a
business, it pays to start thinking about how you might one day position yourself to win the
“battle for the business”—while hoping it doesn’t come to that.
Contact your financial professional to discuss any issues or concerns you might have around
your family business.