- August 1, 2016; Vol. 3, Number 8

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The Cost of Poor Governance: Five examples of what can go wrong when family offices lack proper oversight

by Richard C. Wilson

When I talk governance with the family office clients or companies I advise, I know that they might be thinking that while governance is important, it isn’t critical. That’s a common reaction, as many family offices, business owners and investors discount governance. The truth is, poor governance doesn’t hurt until it kills you.

I want to share five examples of how things can go wrong without proper governance procedures in place and how families have adjusted to meet these governance challenges.

1. One family worth more than $500 million has seen multiple children end up in jail, have problems with drugs, and end up completely broke by the third generation. The biggest loss in net worth for several family members was when a family friend and attorney allowed for the almost complete dilution of the family’s shares in their $1 billion-plus a year company. After five years of failed lawsuits, the family is trying their best to move on. Governance policies on how

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