It seemed as if wedding bells were about to ring.

It’s common knowledge that only a handful of business families continue beyond the third generation as a family with a shared enterprise. How can younger families prepare to join that exclusive club? To gain insights into this question, our research team interviewed members of 100 large, global families. We call these families “generative” because they have succeeded beyond their third generation as both a thriving business and a connected family.

Scene: In a gilded townhome several floors above New York’s Fifth Avenue, a family toasts its patriarch’s 80th birthday. Rather than bask in the warmth of his family’s love and respect, the patriarch makes an announcement: He intends to remain CEO of his family-controlled media conglomerate for another five or 10 years. The patriarch has made this decision even though he himself — and a Forbes magazine cover story — anointed his second-eldest son as CEO-in-waiting.

The boards of family businesses must find the proper balance between compensation for the management team working in the business and earnings for the family shareholders who own the business. It is likely that some family members will wear both hats, which heightens the challenge of distinguishing the return on labor (management) from the return on capital (shareholders).

Family businesses can represent both the best and worst form of capitalism. We’ve seen families build and nurture businesses that invest in the long term, in their communities and in working and growing together as families. But we’ve also seen the other side: At their worst, family businesses can generate conflict that destroys their wealth, scores of jobs and their family relationships in the process. What separates the best from the worst?