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Family businesses have been, for decades, one of the pillars of the global economy. But today they face one of their greatest strategic challenges: succession. The change of leadership is an inevitable moment in the life of any family business, however, the majority is not prepared. In a recent study by Deloitte, data were revealed that should make all leaders stop to reflect: 78% of family businesses expect a leadership transition in the next decade, but less than 25% is actually prepared to execute it. This is the so-called “succession paradox”: everyone recognizes its importance, but few act in a structured way.

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The greatest risk is losing the legacy

Family businesses do not fail only for economic reasons; they often fail because they cannot manage the transition. Succession is not an event, it is a process, and the question is not whether it will happen, but rather if it will happen well, in a structured, thought-out, and strategic way. Given that we have three dimensions that can collide in this process: emotional connection (which removes strategic vision), difficulty in relinquishing power (the individual ego prevails over the collective), and the fear of losing identity (if the CEO changes, the company will disappear), it is precisely for this reason that it is so often avoided. In the study conducted by Deloitte Italy, the data show a worrying misalignment: 85% consider succession critical to success; only 57% have a defined plan; only 23% are actively implementing it. Furthermore, about 30% admit to being behind in this process. In a context of accelerated change, this gap between intention and execution can compromise not only the continuity of the business, but the family legacy itself.

The challenges and opportunities in family succession

History shows that ignoring this moment has real consequences, many of the times the great mistakes committed have to do with:

• Delaying the inevitable: succession is frequently treated as a future topic, however the study shows that 42% of companies expect a transition in the next 3 to 5 years, in this case delaying means losing time, and, many times, losing control;

• Confusing successor with heir: not always the best successor is within the family, the companies that prosper are those that manage to balance the continuity of the legacy with leadership competence. Succession should not be about who “has the right”, but rather about who is best prepared;

• Ignoring the culture and the values: more than processes, what is at stake is the identity of the company, successful family organizations share something in common: a clear purpose that goes beyond the business, without this, succession becomes just a transition and not an evolution.

See the case of Samsung, where successive family transitions brought governance challenges, internal conflicts and reputational issues that affected the global organization, or the opposite example of L’Oréal, which managed to manage the succession in a structured way, guaranteeing strategic continuity while professionalizing the management. The positive examples show a clear pattern, as is the case of BMW, controlled by the Quandt family, which managed to cross generations maintaining stability, professionalization and strategic vision. But we do not need to leave Portugal to find several family groups that structured the governance well and integrated professional leadership managing not only to survive, but to grow.

Source: Deloitte Private’s Defining the family business landscape, 2025

The role of the leader: preparing the future before leaving

The leadership transition requires something rare, the capacity to “let go” of what was built over a lifetime, if it were only a technical topic it would already be solved, being first of all, an emotional topic. Modern leadership is about continuity with evolution and not control. The leaders that make successions happen in an effective way have a common characteristic: they think about the future before it is necessary. This implies developing the next generation, creating governance structures, involving the successors early and accepting new ways of thinking about the business. In a world where many companies struggle to survive the generational transition, those that manage to do it well gain a clear advantage of greater resilience, increase in internal confidence, capacity for innovation and greater sustainability in the long term. In the end, succession is the most demanding test of any leader, not for what they built, but for what they leave prepared, being that the problem is not knowing what to do but having the courage to begin, before it is too late.

Article by Sérgio Almeida, in partnership with Vida Económica.