Fair vs equal
Fair vs equal describes the tension in family businesses between treating every child identically, especially in ownership and inheritance, and treating each child according to their role, contribution and needs.
Most parents want to treat their children equally. A family business makes that hard. Usually one child, or a few, will lead the company. Others may have no interest in it. Giving everyone the same shares, the same say and the same rewards may be equal, but it may not feel fair to the child who has spent years building the business. The reverse is also true.
The tension shows up in several places:
- Ownership: whether shares are divided equally among children or weighted towards those who work in the business.
- Control: whether the successor needs voting control to lead, sometimes handled with voting and non-voting shares.
- Jobs and pay: whether family members in the business are paid at market rates for their role, as a family employment policy usually requires.
- Other assets: whether children outside the business receive other wealth to balance the business stake.
The legal and tax side of these choices should be worked out with the family’s lawyer and accountant.
The common confusion
Families often treat ownership, leadership and pay as one question. Separating them helps. A child can be an equal owner without being the leader. The successor can be paid well for the job without receiving more shares. Many disputes start because these were never discussed separately.
Why it matters for the successor
A successor seen as the favourite carries that perception into every family gathering and often into the company too. Siblings who feel the process was fair, even if the outcome was not equal, are far more likely to support the successor. Talking about it openly, ideally at a well-run family meeting, is usually better than leaving it to a will. Siblings and the successor and choosing between two children as successor explore this further.