The term “family enterprise” carries some degree of confusion in the industry, being defined differently by different groups. Its roots lie in the early days of development of the family business consulting field, which partly originated in business schools and therefore maintained an emphasis on a family’s having an operating company or family business.  However, as the Family Firm Institute¹ has stated, “There is no one definition for family enterprise, but there are a few working definitions that have evolved over the years.”  The UHNW Institute advocates for the following explanation: 

A family enterprise includes three main elements covering the assets, entities, activities, and family members which, woven together, constitute the full family enterprise:

1. The family: All family generations, branches, households, and individuals who are related in some way to the founders or owners of the original enterprise, including their individual personal financial, legal, tax, and related matters such as private investable assets and collections, residences, and non-shared vacation homes.

2. The family business or operating company (optional): One or more unique private or public businesses or operating companies providing substantial financial and nonfinancial benefits to the owners and family. This element is often present but is not required in a family enterprise.

3. Other family entities and governance:  real estate, shared family property, shared investable assets and collections, family foundations, family offices, one or more trusts, private trust companies, decision-making structures (e.g., boards of directors, family councils, and shareholder boards), and decision-making processes (e.g., family constitutions, shareholder agreements). These essentially comprise all the elements of the family enterprise not included in the first two categories.

As indicated, some family enterprises may have never owned an operating company or family business, or the family may have sold, merged, transformed, or closed its original business, yet it still continues as a family enterprise. The enterprise includes ownership by an “enterprising family,” i.e., the family members who jointly own and oversee the family enterprise assets either directly or via trusts.

A common framework organizes the understanding of a family enterprise by various “capitals” of the family, using the acronym FISH: Financial Capital, Intellectual Capital, Social Capital, and Human Capital (Spiritual Capital is sometimes included as well). Intellectual, Social, Spiritual, and Human capitals are considered the nonfinancial capitals of the family enterprise.

In general, the family enterprise encompasses all components of the Ten Domains of Family Wealth model including the activities needed to serve the domains.