Only about 12% of family-owned businesses make it to a third generation still under family control, according to a new Goldman Sachs playbook aimed at the founders and dynasties the bank counts among its most prized clients. It’s a statistic Goldman itself put in print in “Honoring Legacy and Positioning for the Future,” a paper shaped by senior leaders across its Investment Banking and Private Wealth Management divisions.

To dig into the thinking behind it, Fortune put a series of questions to François-Xavier de Mallmann, chairman of Goldman Sachs’ Investment Banking division and chairman of Goldman Sachs EMEA — the banker steering Goldman’s relationships with many of the world’s largest family-controlled enterprises. His answers, lightly edited for length, get at something the playbook’s five-question framework can’t fully capture on its own: that the biggest threat to a family business isn’t usually a missing legal document. It’s optimism.

Your paper says only 12% of family businesses make it to a third generation. Why is the success rate still so low?

Founder and family-controlled companies are major contributors to the global economy. Decisions around succession and ownership are among the most consequential they will make, and both have a significant impact on the business and the family. Goldman Sachs has a dedicated effort focused on serving family-owned businesses and founders around the world, working across our Global Banking & Markets and Asset & Wealth Management divisions.

The statistic is striking—but whether it’s considered “low” or not depends on how you define success. The real questions are whether or not the business is flourishing and whether the decisions made along the way have positioned both the company and family for long-term success.

In general, family-controlled companies tend to outperform non-family-controlled companies over a long period of time, but maintaining that control across multiple generations becomes increasingly complex with the passage of time. In the first generation, the family and business interests tend to largely overlap. Over time, those interests can diverge as the business grows, the shareholder base expands, and the priorities of individual family members evolve. Recognizing those differing, and potentially competing, interests—and being deliberate about how they are balanced—is important given their significance for the underlying businesses.

So, if you take a step back, by the third generation it is a lower percentage of the total number of companies that are still family-owned. But that doesn’t necessarily mean the other 88% have failed. Some companies greatly benefit from remaining in family shareholders’ hands for a long period of time, while others benefit from evolving their ownership structure. There are often needs to consolidate, scale, access new pools of capital or bring in outside expertise, which can require a family to cede some degree of company control. In those cases, changing the ownership structure may actually be what best protects the long-term value of the enterprise the family created.

Beyond the business interests, you also have the interests of the family itself. There isn’t always a third generation who is interested—or best positioned—to operate the business day-to-day. As families grow and increase in complexity over time, different members often also have varying objectives around liquidity. Successful stewardship therefore requires not only thinking about who runs the business, but what structure best positions it for the next chapter.

With all these factors, it really is a case-by-case scenario for businesses that continue to operate under family control beyond a few generations. And while each situation is unique, there is a large base of precedents to learn from as one considers these decisions.

You write that most succession plans are informal even when family businesses know the stakes. What’s actually stopping founders from formalizing a plan — is it denial, or is it strategic?

Most founders are laser-focused on running and growing their business. Particularly in the first generation, the immediate needs of the company tend to take precedence over designing the ownership and governance structure it may need years, or even decades, down the line.

Formalizing succession plans requires founders and families to make a series of highly consequential decisions: who should lead the company; what roles should individual family members play; how should ownership evolve over time, and when will a transition ultimately occur. Those questions take time to work through—particularly when the needs of the business and family are constantly evolving. Many believe that giving it more time and waiting will provide more visibility and information for the decisions to be made. In my experience, starting these conversations early gives families more time on priorities and a structure that can evolve alongside the business.

So, it isn’t a particular lack of interest, but more often a set of priorities at a given point in time and the desire versus need to have to make some of these consequential decisions.

You advise families on separating economic interests from voting rights. How often does a founder actually agree to give up voting control before they die?

There is a wide range of theses on this topic.

Some founders choose to sell during their lifetime because they think it’s in the best interest of the business or family to do so. Others retain voting control during their lifetime but plan carefully for how those rights will pass once they are no longer alive. Some decide to distribute ownership equally among members of the next generation; others believe that whilst the economics can be shared equally, voting power should remain concentrated. And, of course, some are more reluctant to make those decisions in advance.

There are many precedents showing that distributing ownership equally among family members over multiple generations only allows the family to retain and exercise collective control if paired with strong governance. Those who have done it successfully typically have very structured governance, including at the family level, to facilitate decision-making. There are also visible examples of situations where the founder chooses one family member to lead and exercise control, which can be in the best interest of the business and the family’s long-term economic position, but can and often does create significant stress within a family group.

In general, thoughtful long-term owners tend to plan for what happens to their voting rights after they pass.

Your playbook treats private equity and outside capital as tools for preserving family control. But is that a contradiction, considering private equity’s business model is geared toward an exit?

You will notice a trend here: these are nuanced decisions. In the context of what is best for the business, many founders have to consider whether they need external capital, and when they need it. They have to weigh the needs of the business against their desire to preserve family ownership, recognizing that supporting the company’s growth can sometimes mean bringing in external capital even if it dilutes the family’s control.

To the extent they bring in external equity, that has a certain lifespan; over time, either the family can buy it back, or it can be sold to a different investor or investor group in either the private or the public market. The family doesn’t necessarily have to give up control to do this.

If you had to bet, what percentage of the family businesses Goldman currently advises will still be family-controlled in 20 years?

The drivers of whether or not a company stays in the family are, first, does the family have the talent pool and desire to continue to manage the business, and second, as the family gets larger, is there a desire to continue to work together as a family unit to run the business. Some families see tremendous benefit from doing so, and others determine that it is in the best interest of the family not to do so and would rather have liquidity. Sometimes you also see an entrepreneurial spirit, and the capital earned from that core family business goes on to fund new endeavors for the family members.

At the end of the day, we don’t take a view on which will or won’t be family-controlled over time because it is very specific to the family. We help families assess what is best for their business and their family. They come to us because we are very rigorous about catering to the interests of each, and we have access to an enormous experience base, allowing us to assess some of these decisions and highlight some of their potential consequences.

Is there a family business you’ve advised where you privately think the succession plan is going to fail — and would you ever tell them that?

It’s a good question. As a family wrestles with succession plans, we press on two factors: Does the family have a talent pool that is both willing and able to engage in the family business and successfully lead it into the future? These are not easy things to do, so being willing and able is very important. We also challenge families to think carefully about how they define control and how the governance around that control actually works. We make it clear that as a family gets bigger, more structure is needed.

And yes, part of our role is to raise difficult questions when we see potential challenges with a succession plan. These are business decisions, but they are also personal decisions. Our job isn’t to tell a family that its plan will “succeed” or “fail”, but to come to the table with fact-based questions and challenge assumptions when appropriate to help the family reach the best decision for them.

Goldman makes money whether a family stays private or eventually sells. Does that shape which outcome you actually recommend, even subtly?

Absolutely not. We take a long-term view on these relationships, and we help entrepreneurs and families assess their objectives and determine the best path to achieve them. We often advise against transacting when we believe it’s the best decision for the families and businesses.

Our role is to provide the best advice to our clients so they can succeed—whether that ultimately leads to a transaction or not. Anything else would be counter to the best interests of our clients and shortsighted of our longer-term relationships with them.

What’s the one question in your own “five foundational questions” framework that families are most likely to answer dishonestly — even to themselves?

These are very personal decisions, so our job is to provide independent advice, backed by a lot of experience, as input into their decision-making.

You have to ask yourself, is the founder potentially biased on his or her family’s ability to take on the responsibilities of the business and/or to get along with each other in the future?

It is like any family; many founders believe that all members will get along for generations to come and can underestimate how quickly circumstances can change, or the challenges involved in having a larger group rather than one person sitting at the shareholder table.

It is less about dishonesty and more about the optimism anyone has for the future dynamics of their family.