How family firms can best plan for succession

When Rupert Murdoch and his children brought an end to their long running succession dispute earlier this year, the world watched a real life drama unfold around one of the most powerful media empires on the planet. But behind the headlines lay a lesson relevant far beyond the Murdoch dynasty. For any family owned business, large or small, the handover between generations can make or break a company’s future.

Experts say the message is simple. Without a clear and thoughtful succession plan, family firms risk emotional conflict, operational instability and even legal battles that can drag on for years. With nearly two thirds of businesses globally owned or run by families, the stakes are high.

Three firms on both sides of the Atlantic have shared how they approach this delicate transition.

Walker’s Shortbread, one of Scotland’s most recognisable exporters, is a model of steady, long term succession planning. Founded in 1898 by Joseph Walker, the company remains proudly family run. Today, his great grandson Nicky Walker serves as managing director. He says continuity comes from a deep respect for the company’s heritage paired with a willingness to adapt.

At Walker’s, leadership is not automatically handed to the eldest child. Instead the family identifies candidates early, gives them wide ranging experience within the business and gradually expands their responsibilities. This ensures whoever takes over understands both the culture and the commercial realities. Crucially, conversations about succession happen far in advance, reducing uncertainty for employees and family members alike.

In the United States, family owned manufacturers often take a similar approach. One mid sized firm based in the Midwest says it started preparing its next generation while they were still in school. The founders encouraged their children to work outside the company first, gaining professional experience and credibility before returning to take leadership roles. This helped avoid the perception of entitlement and strengthened the business with fresh ideas.

Another family business, a third generation retailer on the East Coast, emphasises transparency. The outgoing leadership meets regularly with younger members to discuss expectations, financial responsibilities and long term visions for the company. They also rely on external advisers, including accountants and lawyers, to ensure the transition is structured, fair and compliant with regulations.

Experts say the biggest mistakes occur when families assume succession will naturally resolve itself. In reality the process requires planning, honest communication and sometimes neutral third party guidance to navigate disagreements. Clear governance structures, such as defined ownership shares and decision making processes, can prevent disputes from erupting later.

Emotional dynamics can complicate matters. Parents may struggle to relinquish control, siblings may compete for influence and long serving employees may fear change. Strong communication and early preparation can ease these tensions. Many successful family firms now use formal succession committees or independent boards to oversee the transition objectively.

For businesses that get it right, the payoff is significant. Smooth succession strengthens employee confidence, reassures investors and preserves the founding family’s legacy. For families themselves, it can prevent rifts that might otherwise endure for generations.

The Murdoch saga may have been an extreme example, but its core lesson applies universally. The future of a family firm depends not just on the next generation’s abilities but on the groundwork laid long before the handover begins.