Been there done that (except perhaps the son's wife banging thing - that I know of). The founder desesperately wanted his son as the boss and his daughter as HR. Except the son was stupid and mean, and the daughter was a bit brighter but even more machiavellous. The son made only yes-men stay under him, the morale went down everywhere. The company went bankrupt shortly after I left. I was not unhappy about the outcome.

Daughter-in-law

The only time I interviewed for a family run private business, the son was the CTO and paneled me with a rather downtrodden looking Indian dude who was the tech lead.

First thing out of the son's mouth: "I see on your resume you worked at AMD. They make hardware so why would they need you?".

Wdym?

Well you are a programmer.

I was stupified, and the tech lead had the exact same reaction Mike Myers had when Kanye said George Bush hated black people.