A family business should avoid outside investors to preserve independence.

• A. True
• B. It depends
• C. Not sure
• D. False

Answer: (D)

The main idea is that independence isn’t automatically lost by bringing in outside capital. A family business can preserve its independence by carefully structuring ownership and governance so the family retains control over strategic decisions. For example, outside investors can hold minority or non‑voting stakes, while the family maintains a controlling voting interest, or the board includes family members and protective provisions that require family approval for major actions. Clear family governance, a well-crafted shareholder agreement, and alignment of goals with investors can allow growth funding without sacrificing independence. So, stating that a family business should avoid outside investors to preserve independence is not universally true; independence can be maintained with the right terms.