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The Cousin Consortium

Provided by the Business Families Foundation, Content Partner for SME Toolkit


A cousin consortium is defined by cousins who share ownership of a joint enterprise; generally third generation members of a family in business but not necessarily—they could be second generation or even a first-generation start-up, although this is less common. A cousin consortium can be formed by 2 cousins or more.

When the family has developed and sustained a family business over one or more generations, they typically face a situation where there are many nuclear families and family branches and numerous family owners, some of which are major owners, while others have minority stakes; some are actively involved in the business and its decision-making processes while others are passive owners of shares in a family legacy.

Compared to other stages, in a cousin consortium, there is a growing need for more formal ways of addressing the family and business visions such as who are we as a family and why do or should we own shares together? The typical challenges of control, leadership, entitlement, sustainability and stewardship encountered in the owner-founder, owner-manager and sibling partnership stages, are still alive and require the same level of attention and care. However, governance processes and routines are usually embedded in family pratices at that stage (such as family meetings and councils, board of directors, the welcoming of outside advisors on the board of directors, some conflict resolution mechanisms among family members and branches, rules for selling or acquiring shares in the business as a family member, etc.) and therefore, families may be better equipped with decision-making processes to address these challenges.

Nonetheless, some unspoken issues may have been around for a long time in families, creating their own sources of stress, while others are newly framed based on the new family or business contexts, and therefore the discipline of sound governance -- including proper communication -- becomes a key success factor in keeping the family together and nurturing its common assets.

Cousins typically have gone through transition at least once. They are often aware of the issues they want to avoid because they have seen their parents arguing or fighting with each other over the succession and transition of the family business. For these reasons, it is sometimes easier for cousins to achieve unity. However, with many more people involved in ownership and management, it can be hard to reach consensus and speak as one voice.

Joint leadership by a cousin consortium requires: authority and credibility, strong communication skills, clear policies and procedures (governance) and a strong group of non-family executives who are ‘family neutral’ and hired solely on the basis of their management skills, competencies or specialized expertise.

Key concerns in a cousin consortium include dealing with: multiple family branches, growing the business, ensuring the flow of relevant and accurate information, a shared vision for the family business and its asset(s) and a commitment to the family at large.

Ownership at the cousin consortium level also creates a number of challenges within the family, such as: transparency and communication issues, managing inactive shareholders and family branch control.  

  • A common concern of the cousin consortium is branch loyalty, as cousins struggle with the dilemma, “is it my family or your family?”
  • The dividend policy is a common issue between cousin owners that are not part of the business and don’t receive a salary, and cousins who work in the business.
  • Cousins are generally concerned about growing the business substantially to secure income for more nuclear families. Pressures for dividends from a larger group of owners can increase.
  • With many cousins it is a great challenge to share a common vision of the business(es) and its assets, and in some cases cousins may not even live in the same city or country and evolve in the same culture.

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In summary, a cousin consortium must understand that the dilemmas of the family versus my branch of the family, and ignoring versus revisiting past-present-future issues in the family enterprise system, must be addressed on a regular basis. This requires the nurturing of existing ‘institutionalized’ governance structures and processes in the family enterprise system (such as family council, board of directors, ownership council) or the refreshing and renewing of these governance structures and processes to support adequate decision-making, and to ensure sustainability and value creation (rather than value destruction) around the family legacy, business(es) and assets.

Learn about other stages:

Back to the Different Types of Owners of the Family Business.

© Business Families Foundation 2016. All rights reserved.

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