Blood, sweat and tiers: Achieving equitable ownership—Family Business Magazine

Maryann G. Bell
July 9, 2024

Succession battles are among the most high-profile issues facing family-owned businesses. But while choosing future leaders out of family members may be fraught with drama, owners can also fall into a different pitfall: treating everyone too equally. In this article in Family Business Magazine, Wingspan’s Maryann Bell delves into the key topic of enshrining meritocracy in a family enterprise by distinguishing between “blood equity” – the stake one derives from just being a family member – and “sweat equity” – that derived from a true contribution toward the business.

“Family business founders often believe that giving all children equal ownership in the business is fair. Unfortunately, equality isn’t necessarily equitable and may not allow for a family ownership structure that can sustain and lead the business,” says Maryann. “The business case for this is straightforward: Sweat equity rewards contribution and aligns incentives to strengthen the ownership of the business. It mitigates the uncomfortable situation of having equal ownership among those who contribute their “sweat” and effort into the business, as well as those who are owners only through inheritance.”

Maryann goes on to discuss the steps toward developing and implementing a sweat equity program within the business – ideally far enough in advance to avoid deflating children’s expectations or setting up ugly succession battles. Read more in Family Business Magazine.

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About Maryann G. Bell

Maryann has led transformation through board work in Austin after almost two decades in finance. Maryann holds a BA from Georgetown University and an MBA from Harvard Business School.