93. Multi-generational family businesses with David Karofsky

In this episode of On Boards, hosts Joe Ayoub and Raza Shaikh welcome David Karofsky, a principal consultant with The Family Business Consulting Group and co-author of So, you're in the Family Business: A Guide to Sustainability.

David brings both professional expertise and personal experience to the discussion, having grown up in a multi-generational family business and later building a family business consulting practice alongside his father. Most recently, his son Adam has also joined David in his consulting practice.

He shares how family businesses operate at the unique intersection of family relationships and corporate governance, where emotional dynamics and business strategy often collide.

The conversation explores the evolving role of governance in family-owned companies, including how boards can help manage succession, create accountability, and ensure long-term sustainability across generations. 

David also discusses why many family businesses resist formal governance structures and how independent board members can help families navigate complex decisions while maintaining healthy relationships.

Key Takeaways

• Family businesses operate at the intersection of family and business

• Each system has its own dynamics, and when combined they can create strong alignment and/or significant conflict.

• Successful family businesses learn to balance emotional family relationships with professional business decision-making.

• Understanding roles is critical to effective communication

• Family members may simultaneously act as owners, executives or board members.

• Recognizing which “hat” someone is wearing during a conversation helps keep discussions productive and focused.

• Governance becomes more important as businesses move across generations

• As ownership expands from founders to siblings and eventually cousins, decision-making becomes more complex.

• Formal governance structures help maintain alignment and clarity as the number of stakeholders grows.

• Independent boards can strengthen family businesses

• Independent board members can provide strategic, objective perspectives and expertise that may not exist within the family.

• A strong board supports management while also representing the interests of the family shareholders.

• Communication is the foundation for long-term success

• Families must be willing to have open and sometimes uncomfortable conversations about strategy, succession, and expectations.

• Strong communication allows family businesses to navigate complexity and sustain the business across generations.

Quotes

“Ownership doesn't constitute a board seat. That goes back to ‘what are the needs of the business’ and let's make sure we have the right people in the room.”

Regarding a family member serving on the board of a family-owned business: “You have to be able to be comfortable being uncomfortable.”

“You've got to really find true independents that aren't going to be yes men or women to the CEO or chairman of the board.”

Regarding the resistance to a board of directors: “The biggest opposition or fear that I have heard… is the fear of loss of control.”

Links

The Family Business Consulting Group

Boards and Family Business: What Could Go Wrong?

Family Business Health check

Book - So, You're in the Family Business: A Guide to Sustainability

Guest bio

David Karofsky is a principal consultant with The Family Business Consulting Group, specializing in advising family businesses about the challenges and opportunities inherent to the family business. His client work is focused on building alignment around communication, executing the transition of ownership and leadership, conflict resolution, strategic planning, and forming governance structures for family businesses.

His interest in family business consulting began with his course work in family business dynamics at the Cambridge Center for Creative Enterprise. David’s work helping corporate executives develop superior listening and communication skills was honed by his professional training in executive team building, strategic decision making, effective communication, managing people, matrix management, and performance enhancement.

Prior to working with FBCG, David worked in his own family business consulting practice with his father for eight years. The father-son team are the authors of So You’re in the Family Business: A Guide to Sustainability. In addition, David was vice president of marketing for a software start-up where he helped launch the company and raise over $10 million in funding. David also worked at EMC Corporation for eight years holding various corporate roles including managing operations for worldwide marketing.

The recipient of multiple achievement awards, David has been a guest speaker internationally and is a mentor to current and former MBA students at Northeastern University’s Graduate School of Business and serves on the Marketing Career Track Advisory Board. He is a founding member and former chair of the Boston chapter of the Young Presidents’ Organization’s Young Adult Forum, member of the Family Firm Institute where he holds certificates in Family Wealth and Advanced Family Business

Advising with Fellow status, member of the Board of Directors of the Rogers Foam Corporation and a former member of the Executive Board of Directors for the Men’s Associates at Hebrew Senior Life.