The Sibling Equity Conversation: When Some Built It and Some Did Not

In my work as a family business psychotherapist, I often see a common configuration: some siblings work in the company, while others do not.

The active sibling draws a salary and enjoys professional credibility. The passive sibling receives very little during operating years. They also watch the business absorb their parents' and active siblings' attention.

A pivotal moment then arrives: a dividend declared, a parent dies, or the business is about to be sold. The asymmetry, which has been held silently for decades, is suddenly at the centre of the room.

Why Advisors Often Struggle with Succession

Lawyers, accountants, and wealth advisors design succession and financial structures well. But these structures are ultimately built on sand if the family has not worked through their psychological trauma or disruptive interpersonal patterns.

In most families I work with, these deeper conversations have never taken place. Families who have had these hard conversations often admit to me that these exchanges last less than 10 minutes at a time—and are usually laced with anger or shutdown.

What advisors call "the equity discussion" is actually four conversations the family has been avoiding for decades:

1. What does it mean that I gave my working life to this and you didn't?
2. Why was I never invited in?
3. What do Mum and Dad actually think I deserve?
4. And what does this say about whether they loved us equally?

This avoidance pattern does not dissolve with a fairer advisory formula. It dissolves when the asymmetric experience beneath the formula is fully seen, expressed, and integrated.

The Five Wounds Beneath the Formula

1. Equal Feels Insulting. Equitable Feels Like Punishment.

To the active sibling who has carried operational risk for two decades, an equal split says their contribution did not count. To the passive sibling who was never offered a role, an equitable split says they are worth less to the family.

This is not a negotiation problem. Each family member is making different meaning around equity.

2. The Invisible Wage.

The active sibling has been paid for years while the passive sibling has not. By the time of a sale or estate distribution, the active sibling has often accumulated several times the cash position of the passive sibling. The passive sibling treats this gap as evidence that the equity split should compensate for it.

But the salary was payment for the work performed, not a transfer from the family. In fact, the empirical reality runs the other way. Research on family-controlled firms has found that family CEOs often receive lower compensation than non-family CEOs in the same firms (McConaughy, 2000).

What often surfaces is that the active sibling has carried years of uncompensated labour that no one ever named. The active sibling might also carry another cost—both identity-based and relationship-based—which the family has never named or counted.

The passive sibling often misses this nuance because the wealth gap is so visible.

Until the asymmetric cost on each side is named, the salary differential will keep distorting the equity conversation from underneath.

3. The Parents' Love.

The parents holding the equity decision usually try to honour two contradictory commitments: equal love expressed through equal share, and fair recognition of operational contribution. Both cannot be fully delivered.

Research confirms that parental altruism—the impulse to treat children equally—produces serious governance problems in family firms (Lubatkin et al., 2005). Most parents attempt to resolve this impossibility by deferring. But later often becomes never.

When a parent dies before the conversation has been had, the active sibling interprets what their parents would have wanted. The passive siblings interpret whether their parents loved them as much. Both interpretations become rigid.

4. The Recognition Gap.

What the passive sibling actually wants is not the money. It is acknowledgement that being "the one who didn't go into the business" was a position they were placed in, either deliberately or by default. The emotional cost to them was real.

A meta-analysis of 26,451 children and adolescents found that those who experienced less-favoured treatment showed higher rates of depression, anxiety, and conflict in their relationships (Jensen & Thomsen, 2024).

When this is acknowledged, the passive sibling can begin to show flexibility on the financial question. When it is not, no formula is generous enough.

5. The Sale as Compressed Grief.

When the trigger is a business sale, decades of unspoken material surface inside the deal window. The advisors run a transaction without the clinical tools to address the compressed existential crisis the family is forced into.

Research applying grief theory to entrepreneurial loss confirms that losing a business produces psychosocial pain that is comparable to bereavement (Shepherd, 2003).

Owners and family members lose not only the asset, but the meaning the business carried. That meaning includes identity, family cohesion, and the expectation of a shared future (Brundin, McClatchey, & Melin, 2023).

In the families I work with, the equity conversation becomes the surface, where all of this collapses into one negotiation.

The Interventions

Note: these are simplified illustrations of clinical work and should only be undertaken with a trained psychotherapist.

Individual Therapy

I begin with the individual sibling alone in the room.

I place between two and five empty chairs in front of them. Each chair represents a family member they need to face: Mum, Dad, the active sister, the passive brother. Sometimes the deceased grandfather whose business this was.

My client sits opposite the chairs. I ask them to address each family member directly, one at a time, as if that person were sitting there: "I invite you to tell your father what you have never been able to say."

Most clients begin with explanation. They tell the chair what they want it to understand. That is not the work. The work is what surfaces underneath the explanation when I redirect them: "Stay with what you feel, not what you want him to know."

What surfaces initially is often anger. Then grief. Then fear or shame.

By the time the client has worked through two or three chairs, they have accessed and expressed primary emotions that decades of kitchen table conversation have never reached.

I then ask the client to sit in one of the chairs themselves. "Be your father now. He has just heard what you said. What is he saying back to you?" The client speaks from the parent's position. What comes out is often something the client has never let themselves imagine: the parent's emotions and perspective.

This exposure is the work. By the time the client is ready for key pair or family sessions, they know what they actually feel and what they actually want. They are no longer negotiating against a position; they are reaching toward something specific.

Key Pair Therapy

Sibling equity is rarely held equally across the family. One or two key pairs usually carry disproportionate weight and influence, and the family cannot move forward until those pairs work.

Three key pairs usually emerge: the parents, the active and passive sibling, and the active sibling and one parent who placed them in the role.

I run several interventions for key pairs; one of my favourites is Coach Me.

I sit with one member of the key pair, while the other watches. I ask the watcher to coach me on what to say to the speaker. "Tell me what your sister needs to hear from you. I will say it on your behalf. Watch what happens."

The watcher coaches. I deliver the line. The speaker responds. The watcher then sees their own message landing in the other person's body, without the defensive armour that gets activated when it comes from them directly.

We then swap. The speaker becomes the watcher and coaches me on what to say to the original watcher. The same dynamic surfaces from the other direction.

What this intervention reveals is the gap between what each sibling believes they are saying and what the other is actually hearing. It is the gap, not the content, that has kept the pair stuck.

Once both siblings can see the gap, they can speak to each other directly without needing me as the intermediary. The Coach Me structure trains a new pattern in the room.

When the family session arrives, both siblings can now hold their own voice without it triggering the other's defensive collapse.

Family Therapy

Before the family can speak honestly, each person needs access to what they actually want. Believe it or not, most of my clients know what they don't want, but when asked what they do want, they stall.

I ask the family the miracle question:

"Suppose tonight, while you all slept, this resolved. Tomorrow you wake up and the equity question is settled. You don't know how. But it is done, and it feels right to all of you. What is the first thing you would notice about your family members that is different?"

Each family member answers in turn. The answers are almost never about money; they are about behaviour.

• My brother would look at me, apologise for his behaviour, and show me respect.
• My mother would ask me what I think before she asks my sister.
• Dad would let me speak to the end of a sentence without correcting me.

These are the imagined behaviours of the family's best version of itself.

Now I move from imagined to experiential. I ask each family member to choose one of the imagined behaviours and practise it in the room—live—with their sibling, parent, or adult child:

• The brother looks his sister in the face, expresses a sincere apology, and tells her he respects the quality of her work.
• The mother asks her son what he thinks about an important topic. She listens intently to his response, before turning to her daughter.
• The father, although a bit restless, lets his son finish a long statement without any interruption.

Some families find it difficult to do this work in a first family session. The individual and key-pair work has to land first.

The key is practice. We practise the new behaviours several times in the room. Each time, the new behaviour holds for a few seconds longer before the old pattern reasserts itself.

By the end of the session, the family has not solved the equity question. But they have done something more important: they have demonstrated to themselves that the best version of the family is physically possible.

Once the family knows that this new way of being with each other is possible, the financial conversation carries a different weight. The advisory formula is no longer the substitute for the family they could not become; it is the structure that supports the family they have just rehearsed being.

Why This Matters

Your advisors design the financial and succession architecture. Family business psychotherapy works at the relational layer beneath it, where the family decides whether it will survive the conversation it has been avoiding for decades.

For broader sibling dynamics, see sibling rivalry in family business. For why succession plans collapse, see why succession plans fail.

I hope you find this helpful.

References

• Brundin, E., McClatchey, I. S., & Melin, L. (2023). Leaving the family business: The dynamics of psychological ownership. Journal of Family Business Strategy, 14(2), 100555. https://doi.org/10.1016/j.jfbs.2023.100555
• Jensen, A. C., & Thomsen, A. E. (2024). Parental differential treatment of siblings linked with internalizing and externalizing behavior: A meta-analysis. Child Development, 95(4), 1384–1405. https://doi.org/10.1111/cdev.14091
• Lubatkin, M. H., Schulze, W. S., Ling, Y., & Dino, R. N. (2005). The effects of parental altruism on the governance of family-managed firms. Journal of Organizational Behavior, 26(3), 313–330. https://doi.org/10.1002/job.307
• McConaughy, D. L. (2000). Family CEOs vs. nonfamily CEOs in the family-controlled firm: An examination of the level and sensitivity of pay to performance. Family Business Review, 13(2), 121–131. https://doi.org/10.1111/j.1741-6248.2000.00121.x
• Shepherd, D. A. (2003). Learning from business failure: Propositions of grief recovery for the self-employed. Academy of Management Review, 28(2), 318–328. https://doi.org/10.5465/AMR.2003.9416377