The greatest challenge for a Brazilian family business arises when the founders, who intimately understand the business, its risks, and its limits, begin to bring in the next generation and, in doing so, build their family legacy.
What was once intuition must evolve into clear rules, and rapid decision-making must give way to shared criteria that all heirs can follow. An advisory board serves as the primary tool for transforming personal practices into written standards, thereby building a legacy of solid governance rather than merely a legacy of assets.
Here, we outline the path a Brazilian family business can take to build this corporate legacy through the use of an advisory board:
1. Written rules endure: As long as governance exists solely within the founder’s experience, it remains a personal asset rather than an institutional one. An advisory board compels the company to document decision-making criteria, meeting agendas, and discussion histories, transforming individual practices into a legacy that future generations can consult and follow.
2. Testing standards before finalizing them: Because it lacks binding voting power, an advisory board allows the family to experiment with governance rules, such as meeting frequency, criteria for major decisions, and methods for resolving disagreements, and to adjust them before enshrining them as rigid bylaws within a formal board of directors.
3. Preparing the next generation: Heirs who enter management without ever having witnessed structured decision-making tend to either replicate their predecessors’ personal styles or struggle to make autonomous decisions when their own time to lead arrives. Participating in an advisory board, even as a guest or observer, teaches the next generation to make decisions based on a structured process rather than relying on individual authority.
4. Norms take precedence over authority: The ultimate goal of any governance structure in Brazil is not to control who makes decisions today, but to ensure the company continues to operate predictably as new generations assume leadership. An advisory board is the first concrete step toward building this kind of legacy; the sooner the family begins, the more time they have to test and solidify these rules before a new generation needs to apply them.
Gradual governance, involving the progressive inclusion of new generations, allows the founder to do more than simply preserve their legacy: it enables them to groom successors capable of managing it with the same rigor used to build it, and that is precisely the role an advisory board fulfills from day one.
