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The long road to succession in family businesses
22 June 2026 | 10 minute read
'Succession is a process that takes time in any business, but particularly in family-run businesses,' says Roberta Crivellaro, Withers’ managing partner in Italy, who with many high-profile family firms. 'If you are the founder, you’re at the forefront of everything and you may be deeply attached to your business. To appoint external managers, to make space for children; it’s very difficult.'
As a result, it’s not unusual in Italy for children to be in their fifties and still not leading the company, which can create uncertainty in the business and tensions in the family when succession planning is left unresolved. In Roberta’s experience, the best way to avoid those pitfalls is to start early. Treating succession as a long-term process rather than a single event often makes those transitions easier to manage.
One recent example is an entrepreneur who has transferred the majority of his business to his two children over several years. 'The children were not even 30 at the time the transition began, which is very unusual, but the father had a serious accident and started to question what would have happened if he had died,' says Roberta. 'Over a five-year period, the business performed very well, going from success to success, so now the father has decided to almost complete the transition, taking a step back and retaining just a small number of shares.'
Succession is a process that takes time in any business, but particularly in family-run businesses
Where the process is delayed, the consequences can be far harder to contain. David Guin, who leads Withers’ corporate practice in the US, sees three recurring issues in the matters that cross his desk. 'One is failing to plan from a tax and wealth transfer perspective. Another is failing to put in place a governance structure that provides enough oversight to keep people satisfied. And the third is creating something so rigid that the only way out is to break the whole thing.'
Tax planning is particularly important in the US, where estate taxes are high. 'We have worked with a family business where the senior generation wasn’t willing to give away any control and had made decisions that made it nearly impossible for the business to survive after death,' David recalls. When the senior generation died, the business was wholly in their estates, and nobody had the liquidity to pay the tax bill.'
Succession issues can be exacerbated when there is more than one branch in a family, which can occur in the case of a divorce, or when the senior generation is made up of the children of the original founder's siblings. David remembers generational transitions followed by litigation between the different sides of the family. In at least one case, this forced the company into a defensive position, requiring it to seek external capital not to expand but simply to survive. In such cases, even when the business is preserved, it may emerge in a diminished state.
Even where families are willing to engage, aligning expectations across generations can be complex. Daniel Tang, a partner in the Hong Kong corporate team, suggests the starting point is an honest assessment of who wants, and is able, to take on a meaningful role. 'We’re restructuring a business now where the parents are relocating and looking at a new holding structure covering mainland China, Hong Kong and the US,' he says. 'The second generation has been given quite substantial power, but only one of them will be actively involved. The others will have more passive, non-voting interests.'
In some cases, families choose to separate business lines altogether, giving each child responsibility for a distinct part of the portfolio. 'If two children are in the same business, they may have different views on how it should develop, so dividing things up is quite common where parents are confident their children can take the business forward,' says Daniel.
Whatever the model, a successful transition will need robust structures and governance in place. Roberta and her team begin with a close analysis of how the business is organized, often creating a holding company through which ownership can be more easily transferred. From here, attention turns to how shares are allocated, not just in economic terms, but in terms of control, and how decisions will be made once the next generation is involved.
In the past, someone might sell the business and go off and play golf... Nowadays, you see families setting up a family office
'The founders need to be fair, but that doesn’t mean children have to be equal,' she says. 'They might have equal economic rights, but in terms of governance perhaps only some are involved. You have to decide who is inside the business and who is outside.' In Italy, questions frequently arise around the role spouses can or should play, which is why it can be helpful to have a family constitution setting out expectations around entry, exit and participation.
Cross-border elements add a further layer of complexity, says Daniel, particularly in Asia, where it’s common for families and their businesses to span multiple jurisdictions. 'We quite often deal with structures involving the US, China, Hong Kong, Macau or the British Virgin Islands,' he says. 'If the next generation are based in different countries, they tend to be less well gelled together so disputes can erupt and we have to come in and advise on how to deal with those situations.'
Daniel describes one long-running dispute involving a real estate business established by three brothers and now owned by their children, who live in different parts of the world and rarely communicate. With the market in downturn, the prospect of a sale is unattractive, leaving the family to navigate disagreements over management and control with limited common ground.
To avoid these kinds of issues arising, it often makes sense to move the family from an operational to an oversight role, bringing in professional management to handle the day to day. 'The family still have seats on the board, so it’s about finding the right management team who are willing to run the business in a way that aligns with their objectives, which may value things beyond simply profit,' says David. 'The governance also needs to be set up to give management the right amount of autonomy, as some families find it hard to let go of their operational role.'
Once a founder has moved on, it’s increasingly normal for them to set up a new corporate structure. 'In the past, someone might sell the business and go off and play golf,' David notes. 'Nowadays, you see families setting up a family office.'
That can include formalizing philanthropic activities or dividing responsibilities across different parts of the family. One child might take on a leadership role within the business, while another oversees a foundation or other non-commercial venture. The aim is not simply to distribute wealth, but to create a sense of purpose that reduces the potential for conflict.
If two children are in the same business, they may have different views on how it should develop, so dividing things up is quite common where parents are confident their children can take the business forward
Underlying these developments is a gradual shift in attitudes, particularly among younger generations who have seen more of the world at a young age, says Roberta. 'In the past, everyone lived under the same roof and relationships were very close,' she says. 'Now children often live and study abroad for long periods, they are more able to say if they are not interested in taking part in the business. It’s good for the people and good for the business, because those who remain are more motivated and more involved.'
While a family business succession process may not end up precisely where a founder pictured, taking charge of it and allowing sufficient time for the next generation to consider their options, gain experience and, if necessary, prove their abilities, is the best way to maintain both profitability and family harmony.
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