Planning for business transition should start early with family members clarifying their intentions, then establishing formal decision-making frameworks and preparing potential successors.gettyimages
On paper, transition of this family’s business to the next generation looked straightforward. The founder was ready to step back and his three adult children – each heavily involved in the company – were prepared to chart its next chapter.
But beneath the surface, disagreements over the enterprise’s future and family legacy created rifts between the siblings.
According to experts at Richter, a business and family office firm, questions about expansion, exit timing and long-term vision often emerge during succession. In this case, conflicting opinions and communication breakdowns escalated into a full-blown shareholder dispute, says Bill McLean, partner and head of family business transition at Richter.
It’s a scenario that advisors at Richter encounter with some regularity: the transition from company owner to next-generation leadership is one of the most consequential periods for a family business, touching on ownership structures, governance, personal relationships and assumptions about fairness and control.
“If there isn’t clarity around future intentions, families often revert to their default roles as parents, siblings and children – rather than functioning as owners and leaders,” Mr. McLean says.
Bill McLean, Richter partner and head of family business transitionsupplied
Many owners put off succession discussions because the organization is performing well or because the topic is uncomfortable, but such procrastination can put the enterprise at risk, he adds. That often delays planning until a crisis such as illness, incapacity or sudden loss hits – when emotions are heightened and action is urgent.“When conversations start early, families can test ideas, adjust expectations and prepare successors thoughtfully,” says Richter partner Greg Moore. “When they start late, decisions tend to be reactive.”
Not every transition leads to a next-generation CEO from within the family, Mr. McLean adds. Some hire external leadership, become passive owners, or sell the company outright. “It’s really about what the family wants the business to do for them going forward,” he says. “Whether that’s to keep operating it, to bring in outside management, or to turn it into a different kind of asset.”
Lay the foundation early
Regardless of how involved the next generation wants to be – if at all – early-stage succession planning is less about immediate answers than alignment, Mr. Moore says. Families should begin by clarifying intent: whether the business will remain family-owned, who wants to be involved and in what capacity. These discussions often uncover unspoken assumptions and highlight the importance of an integrated approach such as Richter’s that connects governance, ownership planning and family dynamics, he says.
Mr. Moore recalls working with a founder who presumed his eldest child would eventually take over, unbeknownst to the next generation. By the time succession was formally discussed years later, expectations had already solidified on all sides. The owner was disappointed to learn his firstborn didn’t want the role, while the other children were upset that they hadn’t even been considered.
Starting the dialogue earlier, Mr. Moore says, would have allowed the family to adjust course before emotions became entrenched.
Determine who is ready to take over
As planning progresses, Richter recommends examining the readiness of potential successors. It requires an honest assessment of skills, experience and temperament – not just lineage. In some families, multiple candidates emerge, each with different strengths and visions for the future. In others, the next generation may not be ready, or may be uninterested in leadership.
Richter partner Greg Mooresupplied
Mr. McLean recalls a family where all three adult children aspired to take the helm, but the founders worried that appointing one would fracture sibling relationships. They ultimately brought in an external CEO for a transitional period. “It wasn’t an easy decision,” he says. “But it avoids forcing a premature outcome.” Over time, mentorship and exposure clarified each sibling’s path, allowing familial leadership to emerge organically rather than by decree.
Mentorship, education and responsibility in stages are central to this phase, Mr. McLean says. Next-generation leaders benefit from exposure beyond the family enterprise – whether through external roles, formal education or working alongside independent directors. These experiences build confidence, credibility and clarity about whether leadership is truly the right path.
Balance both family and business priorities
Longer-term succession strategies such as establishing governance structures, shareholder agreements and formal decision-making frameworks help ensure continuity as the business evolves, Mr. Moore notes. These mechanisms should reflect family dynamics rather than override them.
Families often receive fragmented advice – strategic on one side, relational on the other – without a clear way to integrate the two, Mr. Moore says. Richter’s coordinated approach considers both, he explains.
“Technical solutions don’t work if they ignore relationships. You’ll find advisors who are very good at helping families navigate the relational issues,” he says. “But translating that into sound policies, procedures and legal documents that support the transition is much more complex.”
Treat founding values as a roadmap
A business’s core principles serve as the anchor for every stage of a handover, Mr. McLean says. “Values are one of the most underrated areas of focus,” he says. “Shared values give families a way to navigate change without losing their sense of purpose and become a powerful enabler in a succession.”
Ultimately, successful transitions are not about avoiding conflict or checking off a box. They depend on beginning the conversation early enough to allow trust, capability and clarity to develop over time, Mr. McLean says.
For families contemplating transition, Mr. McLean’s advice is simple: “If you’re thinking about it, that’s your signal. Start now.”
Advertising feature produced by Globe Content Studio with Richter Business | Family Office. The Globe’s editorial department was not involved.