By Nantoo Banerjee
At a time when most big business families across the world are fighting the ‘third-generation curse’ to stay afloat, a few Indian big business houses have survived past the third generation by relying on specific longevity drivers, including early focus on preparing heirs, formal governance, and regularly sharing the foundational history, struggles, and values of the enterprise to keep younger generations grounded and inspired. They also focus on utilizing single-family offices, trusts, and ring-fenced wealth structures to help manage liquidity and professionalize investments across generations. Among the prominent multi-generational Indian business families running giant industrial empires are: the Tatas, GD-Aditya Birla clan, Dhirubhai-Mukesh Ambani family, Bajaj group, Hindujas and Mahindras. However, public companies under family-managed groups can be difficult to control in the long run due to concentrated promoter shareholding, emotional or dynastic decision-making, and unique governance vulnerabilities.
As things stand now, all does not seem to be going well with the family succession of the widely-held US$190 billion Tata empire. It may be noted that the historic corporate architecture of the Tata group is experiencing an unprecedented fracture, as regulatory mandates, internal boardroom manoeuvres, and legal deadlock dismantle the century-old control mechanisms of the Tata Trusts. What was historically viewed as a unique model of philanthropic governance—and occasionally critiqued as a vehicle for extended community or dynastic influence—is buckling under immense operational and institutional pressures.
Following Ratan Tata’s death, his half-brother Noel Tata is facing management power struggle and institutional resistance while seeking to lead Tata Sons, the commercial holding company currently managed by Executive Chairman N. Chandrasekharan. Corporate governance changes enacted during Ratan Tata’s tenure effectively separated the leadership of the Trusts from the chairmanship of Tata Sons to avoid a single individual holding absolute power. In September 2026, the Tata Sons board openly challenged Noel Tata’s authority by voting 4-to-1 to grant Chandrasekaran a third term as chairman, overriding Noel’s explicit opposition. Many believe that Ratan Tata was not quite fond of his half-brother.
Dhirubhai Ambani’s business empire had split soon after his death between his two sons – Mukesh and Anil. While Anil’s empire appears to be already sinking, the three heirs of 70-year-old Mukesh Ambani – Akash, the eldest, his twin sister Isha Ambani Piramal, and Anant, the youngest son – have been groomed to run US$90 billion business empire, having five core business verticals such as energy & petrochemicals, telecom and digital services, retail, media cum entertainment, and financial services. Time will tell the fate of the complex Reliance empire under the Mukesh Ambani umbrella after he passes away. As of now, the business empire looks well-engineered for a seamless generational transition. Yet, things may change in due course. Ordinary shareholders in family-managed public companies face a mix of strong long-term alignment and severe risks related to minority oppression and governance conflicts.
Globally, those large business families that managed to overcome the ‘third generation curse’ to remain prominent are very few. They include the Walton group, Mars Inc, Ford family, the Agnelis, and the Quandt family. Founded in 1962 by Sam Walton in Arkansas, the family retains over 50 percent control of the world’s largest retail enterprise. Across multiple generations, the Mars family has quietly maintained 100 percent private ownership of one of the world’s largest confectionery, pet care, and food conglomerates. Descendants of Henry Ford have continuously steered and retained special voting control (40 percent voting power) of the historic American automotive (Ford Motor) pioneer for over a century. Italy’s Agnelli/Elkann dynasty has controlled Fiat and its descendant holding company Exor for generations, spanning automotive, mobility, and media investments. The Quandt family has held a controlling stake (around 46.80 percent) in the German luxury automaker BMW through decades of multi-generational stewardship.
The core risks of minority shareholders in family managed listed enterprises are many. They could come by way of entrenchment and voting power, related party transactions, compensation and nepotism, and information asymmetry. Families often hold a controlling block of shares (frequently 50 percent or more via dual-class structures), making it almost impossible for ordinary shareholders to oust the board or win a proxy fight. Controlling families may siphon value away from the public entity toward private family-owned group entities through lopsided asset sales, brand royalty payments, or inflated consultancy fees.
Family members or favoured executives may receive outsized remuneration, generous ESOPs with nominal exercise prices, or leadership roles based on lineage rather than merit. Because of close family ties and informal trust circles inside the firm, minority shareholders can be left in the dark about critical strategic shifts or succession plans. They could do little to fulfil their wish for a truly independent board of directors and audit committee willing to push back against promoter overreach rather than a board filled with family members or loyalists.
Extra-high premium public capital issues by family-managed enterprises designed to dilute a portion of owners’ stakes pose unique and severe structural risks to public subscribers. When family-run businesses aggressively price an Initial Public Offering (IPO) or Follow-on Public Offer (FPO) at steep valuations, the capital structure and corporate governance of the enterprise often shield the promoters while transferring significant financial vulnerability to retail and institutional investors. The specific risks that subscribers face under this scenario include valuation asymmetry and wealth transfer and low-cost acquisition for promoters.
Promoters often price public issues based on aggressive growth projections that may not be sustainable. By charging a high share premium, they minimize the number of shares they must dilute to raise a specific amount of capital. Promoters often hold shares acquired over decades at par value (e.g., Rs.10 per share), while public subscribers are asked to pay hundreds or thousands of rupees per share. If the business underperforms post-listing, the public subscriber bears the loss, whereas the promoter’s capital cushion remains vast.
Indian family entrepreneurs dilute their economic interest to a lower threshold while retaining strict operational control over the board and management. When a family’s financial exposure is significantly reduced through a high-premium secondary sale (such as an Offer for Sale or OFS), their motivation may shift from building equity value to securing high management remuneration, perks, and routing business through unlisted family-owned affiliates. Some family-managed firms often have extensive networks of private, unlisted sister concerns or shell companies. High premium capital raised from the public can be vulnerable to redirection via questionable loans, advances, or inter-corporate deposits to weaker family enterprises, leaving public shareholders holding the bag. High-premium issues require aggressive marketing and merchant banker support to clear subscription targets. Once the mandatory lock-in periods expire or the initial market buzz fades, the lack of institutional buying backstop frequently leads to a severe downward correction toward fundamental values.
Family businesses also face succession vulnerabilities as they are usually dependent on one or two patriarchs/matriarchs. The trickiest part before minority shareholders and creditors, including banks and financial institutions, is the possibility of bitter, internal family or succession disputes over ownership which can suddenly erupt, crippling company decision-making, triggering costly legal battles, and destroying public shareholder value overnight. Good corporate governance is essential for family-controlled businesses to survive past the third generation, as global research shows that less than five percent of such enterprises make it that far due to fragmentation, unmanaged growth, and succession failures. By the third generation, the number of family shareholders can multiply, diluting common vision and turning unified leadership into emotional disputes. (IPA Service)
