The first generation heir gets 50% of the founder’s genes. The first generation heir also grew up while the company was being built and saw with its own eyes what it took to go from nothing to something great.
The second generation heir gets 25% of the founder’s genes. The second generation might have known the founder and depending on the relationship of the first generation to the founder might have valued what the founder created. Some second generation heirs carry on the family business, particularly if blessed with a first generation heir parent who was hard working and contributed to the development of the business.
The third generation heir receives 12.5% of the founder’s genes. Almost certainly the third generation did not know the founder and therefore has no direct knowledge of what it took to create the lifestyle the third generation enjoyed.
By the fourth generation the founder’s gene pool has mostly played out (6.25%) in terms of determining the intelligence, creativity and work ethic of the person. In addition by the fourth generation there have been three successive generations that have not had to worry about missing a meal and have been born and raised in luxury. Add to that indulgent child rearing and you have a receipt for failure.
Rarely do dynasties last to or past the fourth generation. By the fourth generation there may be 100 or more heirs, and the monthly allowances from the family trust are becoming too small to support the self indulgent lifestyles of the many non-working trust fund babies. Often the unproductive heirs find an attorney and friendly court to help them bust the trust, liquidate the assets and give out equal shares of the assets. They then squander the cash raised by selling the business leaving the next generation, or their grandchildren to learn again the value of hard work and the motivation of hunger.
#11 My grandfather started a business in 1908. His sons and a partner son took over then one of my uncles two sons took over and wanted to sell but were blocked by the three others that had a share. When the others got older they bought out those shares by lying to my uncle then promptly sold the company. 99 years in business and the 3rd generation sold it. Money divided by the 5 ‘kids’. I imagine the 4th generation will blow what remains of the money after my cousins are gone.