Most business-owning families can tell you exactly what they spend to protect their company. Insurance, advisors, legal work, investment management, it all adds up to one or two percent a year, tracked to the decimal. But when I ask families what they invest in the family itself, in the relationships that will carry the business and the wealth into the next generation, the answer is usually silence.
That question sat at the center of my recent conversation on Your Next Gen Friend with Michael Palumbos, founder of Family Business Flywheel and host of the Family Biz Show. Michael is a second generation wealth advisor who bought the family business side of his father’s practice in 2018, and his story is a study in what it takes to keep a family whole while ownership changes hands.
Every Family Has a Flywheel
Michael describes every business-owning family as having a flywheel, whether they realize it or not. The family runs the business. The business produces wealth. The wealth flows back to the family, which either invests in itself or does not. When those three pieces are aligned, the flywheel spins smoothly. When they are not, it grinds, and the grinding shows up as conflict at the dinner table, silence between siblings, and transitions that stall for years.
What I appreciate most about the flywheel is where Michael places the emphasis. The business is an asset. The investments are assets. But the family, in his words, is the most important asset of all, and it is the only one most families never fund. A facilitator to work through values and vision, honest conversations about communication styles, time spent aligning on where the family is going together, these are investments in harmony, and they pay out across generations.
A Transition Built on What Mattered Most
Michael’s own transition shows what that alignment looks like in practice. His father built a practice serving family businesses starting in the 1970s, grounded in a philosophy of serving first, last, and always. When it came time to transition, there was a complication many families will recognize. His dad had a longtime business partner who was not family, and that partner had been there long before Michael made the decision to join.
Rather than force a single outcome, the two sides split the practice based on what each person valued. Michael, who cared deeply about family businesses, bought those clients. The partner, who preferred working with executives and retirees, took that side. The idea came from the partner himself, and it worked because everyone was honest about what mattered most to them. This is something I see over and over in our work. When a transition is rooted in what each person truly values, families discover creative ways to structure the deal, the timeline, and what is included that a standard playbook would never surface.
Michael paid twenty percent down and the balance over four years. It cost more than his house. He is proud that it was not a gift, and he credits that arrangement with shaping how he showed up as an owner. His father got his win too. On December 31 he hung up his licenses, stepped away completely, and spent his time with Michael’s mom, which is exactly what he wanted.
Harmony Is Not the Absence of Conflict
Legacy and harmony can sound soft until a deal gets hard. Late in Michael’s transition, a significant client relationship shifted in a way that felt unfair to him, and the economics of the deal did not move with it. He was angry. His father, weeks from the finish line and ready to be done, held firm.
What carried Michael through was not pretending the conflict away. It was getting clear on his true deal breakers, the small set of things that would genuinely make him walk away, and recognizing everything else as a compromise he could live with. I went through the same reckoning in my own transition. I remember asking myself whether I was making the biggest mistake of my life, and what steadied me was coming back to my own deal breakers and realizing none of them were actually being broken. No one gets everything they want in a transition. The families who preserve harmony are the ones who know the difference between a wound and a walkaway.
Michael also shared a warning about what happens without that clarity. He told me about a family that never prepared its third generation to lead, only to do. When the second generation grew tired of carrying the weight, they sold to an outside buyer without professional guidance, and a sophisticated acquirer took full advantage. The family gave up an estimated ten to twenty percent of the company’s value, and the legacy they had spent two generations building ended at the closing table.
You Never Leave the Family
One of the ideas I most wanted listeners to hear in this conversation is that the family is the one circle of the flywheel no one ever leaves. A rising generation member might have no role in the business. They might opt out of the shared wealth because of their own values, or choose to participate only through philanthropy or impact investing. I have met successors who made every one of those choices. None of it makes them less a part of the family, and none of it diminishes their worth.
That framing matters for harmony because so much family conflict during transition comes from treating the business role as a measure of belonging. When families separate the two, honoring each person’s chosen way of contributing, they protect the relationships that outlast any company.
Michael offered a comparison worth sitting with. Fifty years ago, seeing a therapist carried a stigma. Today it signals that someone takes their mental health seriously. He hopes the next ten years bring the same shift for families, where bringing in a facilitator skilled in governance and family dynamics is not a sign that something is wrong, but a sign the family is serious about preparing its next generation. I share that hope.
Starting the Conversation Together
So how does a family begin? Michael’s advice, especially for rising generation members who feel the future pressing in while their parents stay buried in operations, is to do things together. Share a podcast episode and ask a parent what they think of it. Attend a family business center event side by side. Join a webinar and talk about it afterward. It might be a slow burn that takes months or years, and that is normal.
I will add the piece that makes it work. Transitions succeed when both generations come to the table together. You cannot build the plan alone and present it to your parents, and an owner cannot hand down a finished plan and expect enthusiasm. The plan has to be built jointly, rooted in what matters most to every person at the table.
That is the work my team and I guide families through every day at The Transition Strategists. If your family is starting to think about what comes next, whether you are the owner or the successor, I would love to talk. Schedule a discovery call at transitionstrategists.com/discovery.
