Why Is Passing the Torch So Tricky? Unraveling the Challenges of Family Business Succession 

As a second-generation leader of a family business, I’ve come to appreciate the unique blend of tradition, values, and challenges that define our enterprise. Our business, like many others, is built on a foundation of hard work, dedication to clients, and family legacy. Yet, as we look to the future, the task of passing the torch to the next generation looms large, filled with both promise and uncertainty. Particularly, because many of us have always been told that most family businesses fail on Gen Two’s watch. 

Debunking the Three-Generation Family Business Myth 

The idea that family businesses are doomed to fail by the third generation stems from a misinterpretation of a study from the 1980s. This study, which focused on manufacturing companies in Illinois, has been widely cited but often misunderstood. In truth, family businesses can and do thrive across generations, often outlasting their non-family counterparts. Some of the world’s oldest companies are family-owned, proving that with the right strategies, longevity is achievable. 

The Complexities of Succession Planning 

In our work supporting families with generational transfer decisions, I have directly observed the countless challenges involved in succession planning. Most families (ours included) face the uncertainty of leadership transition, and all have unique dynamics and nuances. Without a clear plan, the future can seem daunting, and the risk of conflict or unintended outcomes increases. 

Understanding the Challenges 

Succession is not just about handing over the keys; it’s about navigating change, identity, and history. 

1. Embracing Change
   Change is inherently challenging. It requires altering established habits and roles, which can be uncomfortable for both current and future leaders. Successful succession demands a willingness to adapt and embrace new ways of thinking. 

1. Redefining Identity
   For many of us, our identity is intertwined with our role in the business. Succession can feel like a threat to this identity, raising questions about self-worth and purpose. Future leaders, too, must navigate their evolving identities as they step into new roles. 

1. Honoring History
   Family and business histories are powerful forces. They provide strength and continuity, but they can also be barriers to change. Unresolved conflicts and past experiences can complicate the succession process. 

Strategies for a Smooth Transition 

To overcome these challenges, we’ve observed that a shift in approach is necessary. Traditional succession planning often focuses on structural, legal, and tax considerations. However, a more effective strategy could involve a detailed, bottom-up analysis of the business. 

Granular Analysis 

We’ve broken down our business into its operational components, identifying every function and decision necessary for daily operations. This approach shifts the focus from roles and titles to the specific tasks that keep the business running. 

Incremental Transition 

We’ve developed a detailed plan for transitioning each function, with clear goals and timelines. This method prevents backsliding, where senior leaders might reassert control, and ensures accountability through measurable progress. 

Building Confidence 

By implementing small, incremental changes, both generations can build confidence in the succession process. Successful transitions in minor areas can reassure senior leaders of the competence of their successors and encourage younger members to embrace their new roles. 

By adopting a meticulous, function-focused approach, we can navigate the complexities of succession and ensure the continuity of our business across generations. 

Continuing the Conversation with SBAM Family Business Council

While these frameworks are a good start for our family, they are far from a one-size-fits-all approach. SBAM is helping to lead the conversation by creating the Family Business Council subcommittee within their Member Volunteer Program. The council serves as a collaborative group of individuals tasked with supporting the success and sustainability of family-owned businesses by addressing generational transition, governance, and business continuity challenges. Having a platform to discuss these uniquely personal issues with others who are experiencing similar events is invaluable. 

In navigating the intricate journey of family business succession, we remain committed to providing thoughtful, tailored strategies that honor each family’s unique legacy while paving the way for future success. Our experience and dedication to understanding the nuances of these transitions ensure that we are well-equipped to support families in achieving a seamless and sustainable generational handover. 

By John G. Rogers; originally published in SBAM’s March/April 2026 issue of FOCUS magazine.

John G. Rogers, Senior Institutional Consultant and Investing with Impact Director, serves as relationship manager for the Jbara and Rogers Financial Management Group at Morgan Stanley’s nonprofit, corporate and individual clients. He leads the group’s Morgan Stanley at Work financial wellness program, Small Business pooled retirement plans, and its mission and sustainable investing initiatives. Forbes Magazine named John to its list of Best-in-State Top Next Generation Wealth Advisors in 2025. 

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