How Family Businesses Are Rethinking Succession
The middle sibling wasn’t sure she wanted to take over her father’s mid-sized manufacturing company — particularly since her eldest brother demurred and her younger sister couldn’t decide if she wanted to stay in the family firm or pursue a law career. But she also felt an obligation to continue the business her father had spent 30 years building.
Such succession tensions play out across family business globally, and with increasing urgency. While around 70% of family businesses aspire to pass ownership to the next generation, only 30% succeed in doing so, according to PwC’s 2024 Global NextGen Survey. A starker fact: only 13% of those businesses make it to the third generation.
Succession by Choice
For family businesses in 2025, succession is no longer assumed but negotiated. The path forward isn't forcing reluctant NextGen members into roles they don't want. It's about getting honest with what draws younger generations in: meaningful work, real autonomy, and the chance to build something new rather than simply inherit something old. If current family leaders can do that, they can create conditions for generational succession to be enticing.
Of course, there are various reasons for hesitancy in generational succession. For one, younger family members may not wish to work in the family business or take on the responsibility that comes with managing a firm. The senior generation, meanwhile, may struggle with how best to prepare the next generation or decide who is up to the task. If you fail to engage the next generation early, they are less likely to feel a connection to the business. Pass on too much knowledge, and they might just tune out. After all, it’s more difficult to listen closely when it’s Dad who’s giving you a 360-review than a manager who’s not related to you.
The Making of a NextGen Leader
Some family businesses believe the best lessons come from apprenticeships and working alongside family leaders. Rogan Donelly, who served as CEO of drinkware company Tervis, spent his summers working in the warehouse and other departments, including marketing and operations before becoming company president in 2016 and CEO in 2020. The rotations gave him a deep understanding of all aspects of the firm, allowing him to spearhead innovations at the company including unveiling stainless-steel tumblers and implementing more sustainable business practices.
University programs that specialize in family enterprises can be helpful because such programs tackle subjects that traditional MBA curricula don’t – or that family members may not want to discuss. Paul Lilley, a third-generation leader at equipment company Lilley International, has taken courses on strengthening familial partnerships, for example, at University of North Carolina at Chapel Hill’s Kenan-Flagler Business School.
Other hot topics for family enterprise programs include navigating when to bring in non-family leadership, how to manage family members who own shares but don't work in the business, and how to distinguish between business decisions and family decisions.
“There is higher potential for role conflict … due to the dual roles of family members being a member of the family and working for the business,” concluded Esra Memili, an associate professor of entrepreneurship at the University of North Carolina at Greensboro, in her research on family firm role conflicts.
For Stephanie Stuckey, CEO of Stuckey’s, which her grandfather started in 1937, the best education came in an unconventional form: reading six boxes of her grandfather’s letters, correspondence, interviews and employee evaluations. “Every night after I was trying to find out what to do with 30,000 fidget spinners and make it profitable, I would read his papers,” Stuckey said of the family’s roadside shops. “That was my MBA, my education to revive a family business.”
AI as a Potential Pull?
One emerging factor that may woo younger generations into the family business? AI. According to PwC, 40% of NexGen family business members believe that being an AI champion will help them move into a leadership position, and 58% say they’re likely to participate in AI family business discussions in the future.
This is particularly significant given that only 14% of family businesses currently have a team or person directly responsible for generative AI. At the same time, AI adoption among Gen Z stands at 31%, compared to 20% for Boomers, which could help family businesses figure out the best way to use the technology going forward. As one family business NextGen member noted in the PwC report, “I feel I can add to the debate because I come from a newer generation and can show a modern mentality.”
Still, considering that almost half of family businesses have either prohibited or not yet started to explore AI, it may take a while to become a leading reason for the next generation to join the ranks. As one fifth-generation leader put it, “We may think we understand it, but we don’t yet know its limitations.”
For all the tensions that can arise in family businesses, these companies consistently report healthy growth and contribute greatly to the economy. Last year 43% reported double-digit sales increases. The stability and long-term thinking they bring to markets – the largest 500 family firms generate annual revenues of $9 trillion – is critical at a time when economic uncertainty and geopolitical volatility are ever present.