The path of Brazilian family businesses is marked by both achievements and vulnerabilities. They represent 90% of the corporate landscape, yet only three in ten survive to the third generation. This highlights a fundamental challenge: governance.
Most are privately held and face no legal requirements or investor pressure to adopt governance structures and best practices—unlike publicly listed companies.
The study Unlocking the Potential of Family Businesses in Brazil, conducted by McKinsey in partnership with the Brazilian Institute of Corporate Governance (IBGC), found that in a sample of 65 Brazilian family firms with revenues of up to US$500 million, many had not yet adopted formal governance structures. Only 34% reported having an independent board of directors to guide strategic decisions. Globally, the figure is 74%, according to the same survey of 270 family businesses.
Why the Advisory Board Matters
Given the maturity level of Brazilian companies, an advisory board can be a critical step toward long-term sustainability. With no legal requirement, it is established voluntarily, with the clear purpose of adding value to the business.
Decision-makers can use it as a forum to deepen debate and analysis, broaden perspectives, and leverage the experience of independent advisors—professionals with diverse industry and market backgrounds.
An advisory board has no formal decision-making authority. Instead, it provides a space for discussion and guidance, supporting managers and shareholders in making more informed decisions. It often brings strategic issues—such as innovation, sustainability, artificial intelligence, and talent development—onto the agenda, topics frequently overshadowed by day-to-day demands.
The advisory board might also play a key role in succession, one of the greatest challenges for family firms. Founders often embody both control and the reference point for stakeholders. Their absence can create a damaging void. The board helps shape succession planning, discussing criteria, heir development, and, when appropriate, the hiring of external executives.
A Sign of Maturity and Credibility
For banks, partners, and investors, establishing an advisory board signals progress. It demonstrates that the company is open to external dialogue, committed to adopting best governance practices, and focused on long-term continuity.
Governance in family businesses is more than processes, structures, and rules: it is about legacy. An advisory board is a first step—low-cost and high-impact—for Brazilian family firms to remain relevant across generations.
Leticia Reichert is a board member in family businesses of different sizes and industries and a second-generation member of the FCC Group.
(The opinions expressed in this article are the sole responsibility of the author and do not necessarily reflect the position of Brazil Stock Guide)