Truth, Tensions and Transitions: The CPA’s Role in Family Business Dynamics

Truth is often stranger than fiction — especially in family businesses. CPAs are regularly called into situations where the balance sheet is the least complicated part of the engagement. The real complexities are the human ones: parents, children, siblings and spouses navigating roles that span from the boardroom to the dinner table. After years advising entrepreneurial and family businesses through more than 150 mergers, acquisitions and ownership transitions, I can say with certainty that our profession sits at a pivotal intersection of numbers and nuance.

I have heard variations of the same painful admission more times than I can count: “I can have a good relationship with my father or my boss — but not both,” or “I can have a relationship with my brother or my partner — but not both.”

When family and business overlap, those statements are not abstract — they are operational realities. The consequences are not just emotional but financial, legal and strategic. And this is where CPAs play a critical role: not in choosing sides, but in helping clients make conscious business decisions, fully aware of the trade-offs they are making.

Conscious Decisions Over Hidden Resentments

Family enterprises rarely operate on perfect 50/50 equity in contribution. One sibling may be more competent, one may work harder, another may coast — or at least be perceived as coasting. Left unacknowledged, perceived inequities can corrode trust and ignite resentment that bleeds into every aspect of the business and family life.

A CPA’s responsibility is not to determine who is right or wrong. Instead, it is to shine light on the reality of these inequities and help the family make conscious decisions about governance, compensation and ownership. That means framing the questions clearly: What is fair? What is sustainable? What will keep both the family and the business intact?

For example, when a parent-owner contemplates succession, there are imme­diate financial and governance questions: Who should lead? At what salary? Should ownership be transferred equally, or does one child buy out the others? What price is fair?

The CPA as Trusted Middle Ground

When tensions run high, CPAs must remember: the company is their client. In can be wise to recommend that individual stakeholders retain their own counsel or advisors. This does not weaken the CPA’s role; it strengthens it. By holding the line on neutrality, the CPA remains the stabiliz­ing force ensuring decisions align with the long-term viability of the business. Families may fracture, but a CPA’s influence can help reduce the scars.

Navigating Common Flashpoints

There are recurring scenarios that CPAs in family business advisory should be prepared for:

• Succession planning: When the founder hangs on too long, children feel stifled. When they exit too quickly, successors feel unprepared. The CPA’s role is to quantify readiness, scenario-plan the financial impact and guide structured transitions.
• Sibling partnerships: Creating clarity around roles, performance expectations and compensation structures is essential to avoid long-term dysfunction.
• Ownership transfers: Equity splits rarely feel “fair.” Helping families separate emotion from valuation and ensuring agreements reflect both business realities and family priorities, is crucial.
• Exit events: In M&A or third-party sales, perceived favoritism or exclusion can derail deals. CPAs can safeguard process integrity by anchoring decisions in independent analysis and best practices.

Principles for CPAs in Family Dynamics

From years in the trenches, I offer three guiding principles for CPAs working with family enterprises:

1. Acknowledge the realities: Family dynamics are not “soft issues.” They are real, they are valid and they directly im­pact financial outcomes. Ignoring them is neither neutral nor professional.
2. Serve the company first: Stay grounded in the business’s best interest. The family may splinter, but if the company is preserved, there remains a foundation for reconciliation.
3. Lead with humanity: Even when advising against someone’s personal interests, treat every stakeholder with respect and dignity. In doing so, CPAs model the behavior families often cannot summon for themselves.

Family businesses are equal parts opportunity and volatility. CPAs hold a unique position of influence — not only to safe­guard the numbers but to help families see their choices clearly. By bringing neutrality, structure and humanity into the room, CPAs help ensure that when clients sit down at both the boardroom table and the holiday dinner table, the business — and the family — can endure.

Jay Levine, CPA, CGMA, is a partner with Prager Metis and is the leader of the NJCPA Accounting & Auditing Standards Interest Group. He can be reached at jlevine@pragermetis.com