Blood is not a contract

Why family loyalty is not enough to protect capital

My professional insights · Lyudmil Karaulanov · 6 min read

Published: 16 October 2026 · Version 1.1

It is difficult to say, “I want to sell my share,” at the family table. Especially when the brother sitting opposite you goes to work every morning in the company your father founded. The words can easily sound like a rejection of everything you share, even though you have a very specific need in mind: a home, your children's education or a venture of your own.

It seems to me that this conversation deserves attention before we try to decide who is right. For the person working in the business, the shareholding is tied to a profession, responsibility and daily effort. For the heir outside it, it may be their most significant asset, yet one whose value they cannot access. The same ownership plays different roles in two people's lives.

A shared history does not make needs identical

Under the founder, decisions are often concentrated in one pair of hands. The founder knows the customers, the people and the machinery, and can reconcile personal needs with those of the company. Afterwards, ownership may be divided among heirs with different professions, places of residence and plans.

That is not a problem in itself. A family does not have to live in the same way to preserve shared assets. But it needs arrangements through which different wishes can be heard and turned into workable decisions.

I would not accept that staying out of management diminishes an owner's rights. It would be equally unfair for the work of the heir managing the business to go unrewarded because “we are all family”. If we do not separate these issues, each side will have a convincing explanation of why they have been treated unfairly.

When someone wants their money

After years without sufficient income or an opportunity to exit, an outside offer may bring relief. It is worth understanding that before calling it betrayal. A ban on selling does not resolve the need that led the person to seek a buyer.

Of course, a new owner may change relationships within the company. Selling a small stake does not necessarily mean losing control; that depends on the rights, voting majorities and the structure as a whole. The family has reason to want protection. The person leaving has reason to want a real way to realise the value of their stake.

What would a fair exit look like?

For me, it begins with a few very practical questions. Who can buy? How is the price determined? When will it be paid? What happens if two people want to leave at the same time, but funds are available for only one?

An independent valuation, specified sale windows and payment by instalments can help. Every solution, however, also redistributes risk. If the seller waits years for payment, the question remains how they are protected during that time. If the company pays immediately, the question is whether it will be left without working capital.

Transfer restrictions, priority rights for the other owners and consolidating holdings in a holding company may also have a place. Their applicability depends on the legal form and the law. A family agreement works when it is aligned with the company's governing documents; signatures alone do not secure the desired effect in relation to the company and third parties.

A holding company will not find the money for us. If the need for income and an exit remains unresolved, the conversation simply moves to its owners.

Work, income and parting ways have different prices

To me, one of the most useful steps is to distinguish remuneration for work from income from ownership. The price and terms of an exit can then be considered separately.

This allows the heir working in the business to receive fair remuneration for their responsibility, without every payment being seen as a privilege. And the person outside management can discuss the return on their capital without having to prove that they have worked hard enough for it. This will not eliminate every disagreement, but it provides a fairer language for the conversation.

Where is the point of instability?

What this concept means →

It appears when someone has a legitimate need to leave, but shared ownership offers neither a procedure nor the resources. Locking capital in too tightly also has a cost: someone remains an owner without adequate information, income or a reasonable opportunity for change.

That is why I believe these arrangements have the best chance while the family can still talk calmly. The aim is not to prepare for separation at any cost, but to avoid turning staying into an obligation with no way out. Shared assets stand a better chance of being preserved when people can see room within them for their own lives.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.