Succession in a family ownership goes beyond transferring shares or appointing a new CEO. It is one of the most pivotal moments in family ownership – for the family, for the business, and for the communities that rely on it. Family-owned businesses have a tradition of providing resilience in times of crisis, solid finances, local employment opportunities, and leadership that people trust (for more on this, see our article on family ownership as a team effort). Hence, approaching succession holistically and in due time is essential to ensuring a smooth transition.
When succession is handled strategically, it creates opportunities for renewal and long-term strength. When it is not, both the family and the business risk unforeseen challenges. In this article – and the next – we outline a practical approach to achieving a successful succession.
Succession Is More Than Tax and Law
Conversations about succession often focus on tax, wills and legal considerations. However, experience shows that the decisive questions lie elsewhere: In the relationships, expectations and future opportunities for both the current and the next generation. What are the founder’s hopes for his or her next chapter? What role does the next generation wish to take on? Is there a suitable candidate to lead the business or manage the wealth – and is that truly the life they want? How should decision-making work when ownership shifts from one generation to the next?
These questions cannot be answered by applying a template. Instead, they require thoughtful reflections and meaningful dialogue. And the earlier these dialogues are initiated, the better are the chances that succession becomes a constructive process rather than a burdensome one.
Time as a Strategic Asset
Time is often the most valuable resource when it comes to a successful succession. When planning begins in due time, it creates space to:
- Prepare for the unexpected. For example, if no one in the next generation wishes to take over and an external CEO must be appointed.
- The founder so she or he can define the next chapter: How can a fulfilling life look like after a busy and successful career?
- Allow the next generation to grow into their future roles by pursuing the right education, gain relevant experience, and agree how they want to work together.
- Select advisers who can support collaboration across generations.
- Have the difficult conversations – before pressure builds.
By starting early and thinking strategically, succession can become a unique opportunity for development – not just a handover.
The Keys to a Successful Succession
Three elements consistently stand out in successful successions basis our experience advising owner families:
- Clarity about ownership and purpose: What should the business and the family represent and contribute to in the generations ahead?
- Involving the next generation on their own terms: They should not simply fill a gap but have the time and room to grow into roles and responsibilities.
- Professional structures and advisers: A successful succession rests on a combination of human insight and solid governance.
At Harbour, we guide owner families through this stage, focusing on the people, the business and the values guiding them. Feel free to contact us for an informal conversation, or read the next article in the series, which outlines succession planning step by step.
