Their wealth advisors had addressed all the financial issues involved, but no one liked the proposed solutions. After some in-depth discussion about family dynamics, they figured it out: The family was never going to agree on an outcome. Two people involved were not getting along and that was creating a roadblock to agreement.
For family businesses, what’s personal is also business, and what’s business also gets personal. And given all the sensitive issues that can come up during legacy planning — which is estate planning that includes your financial and non-financial goals for your family and business — it’s no wonder wealth advisors see challenging situations all the time in their work advising families on the process.
The business is often a family’s biggest asset, so how it could evolve (or resist evolving) when leadership changes is already a contentious conversation. New leaders bring new values, philosophies and ideas that require adjustment. Throw complicated family dynamics into the mix, and it’s easy to see why only a third1 of U.S. family businesses have managed to get a proper succession plan in place.
Your family can seek to overcome those odds. By being proactive about resolving family conflicts and improving communication, business-owning families can help set themselves — and their business — up for success with a strong, clear legacy plan.
5 strategies for overcoming conflict in legacy planning
1. Stop dragging your feet
Think you’ve got plenty of time left before you need to start your business succession plan? Your kids likely disagree. Nearly six in 10 next-gen leaders say that the current generation’s hesitancy to retire is a problem.2 And if they’re feeling anxious and unprepared, you could be putting your legacy at risk. Research shows 25 percent3 of failed family business transitions happen because of an ill-prepared heir.
Ideally, your legacy plan will be in place well before it is implemented —whether that is months or years in advance depends on a lot of factors. Many families only put off these discussions because they know they’re going to involve disagreements; who wants to argue with family? But even if it won’t go into effect for five or 10 years, starting your legacy plan now gives both generations more time to address potential issues and get on board. Plus, an early start could become invaluable if an illness, injury or just the sudden urge for an extended vacation prompts an unexpected early transition.
46% of family business members say they discuss family issues in “informal” or “unstructured” ways, and 24% describe discussions as “adversarial.” Source: Family Enterprise Foundation
2. Start with values, not vested interests
Before asking, “Who’s going to be the boss?” ask, “What are we about?” It’s easy to assume that everyone shares the same ideas about company culture and values in a family business. But you can avoid other misassumptions down the road by making sure you’re all starting with the same idea of what your business is all about. A 2021 survey4 found family businesses with written values were better prepared for succession than those without. A study by PwC U.S. Family Business Survey showed 49%, less than half, of business-owning family members say there is family alignment on company direction.
3. Relearn how to listen
Start getting down to business by brushing up on your active listening skills. When families are unsuccessful at multi-generational wealth transfer, 60 percent of the time this can be attributed to a lack of communication and trust within the family.5 The reasons family members tend to talk past each other are as obvious as they are hard to shake: Older generations believe that they know best based on decades of experience; younger generations believe they know better based on today’s markets and future-facing ideas. Often, they’re both partly right.
Don’t hesitate to bring in a conversation faciliator6 to help with tricky topics and ensure everyone is heard. It’s not representative of an issue with your family closeness — it’s a sign of love and respect that you want to keep things civil, fair and well-communicated. Another strategy to try would be a roundtable: a discussion method that encourages active listening. Everyone at the table is given a specific amount of time to express themselves, and no one else speaks during that time.
4. Bond over giving back
Your legacy plan will cover more than just your business, which is an opportunity to find common ground. According to a study by PwC UK Family Business Outlook, 74% of family business leaders say their family particiaptes in traditional philanthropy or grantbased giving. Philanthropy can be a shared goal across generations, even if they feel passionate about different causes or charities. A Blackbaud study7 found that Baby Boomers like giving to local social services organizations and religious institutions, while Gen Z prioritized giving to benefit children and animals. Get involved in the intergenerational compromise by finding ways to agree on how to give.
Does the long-running family foundation feel more like a hassle than a privilege for the younger generation? Giving in a different way, like through a donor-advised fund, could allow your family to move forward with multiple giving priorities and less time commitment. This type of win-win can help different generations realize consensus is possible and motivate everyone to bring the same open-mindedness to the business succession planning table.
5. Lean into letting go
One particular family business stands out as a good example of some of the common traditional dynamics: highlighted to the right. The dad and founder of a manufacturing company was hesitant to let go of the old way of doing things. The son had a big idea to innovate. Ultimately, the son was given some latitude to invest in his vision — and grew the company to 24 times its original size.
Now, that isn’t going to happen every time. Sometimes, the next generation is going to fail. But experts tell us that the way to build resilience in the next generation of family business owners is to give them room to fail.8
To a parent and someone who spent their life building a business they love, it can sound like utter madness. But then, if you asked a founder to tell you some of the biggest lessons they learned over the course of growing their business, so many stories are about risks, failures and near misses. Understanding how valuable those learning experiences were for them helps leaders realize how important it is to give the next generation the chance to learn by doing as well.
A survey of next-generation family business leaders found 59% believe their own family business is moving too slowly on sustainability.
Source: PwC Global NextGen Survey
When entering tough legacy planning conversations, keep in mind
that the transition is going to happen no matter what — with
the conflict behind you or unresolved.
When developing a legacy plan, both generations are generally happier in the end when compromise drives the process. For the younger generation, this means accepting institutional wisdom. For the older generation, it means letting go of the instinct to micromanage.
When entering tough legacy planning conversations, keep in mind that the transition is going to happen no matter what — with the conflict behind you or unresolved. Everyone can agree the former is best. Many people feel grateful to have spent their lives running a family business. That’s why it’s so sad to know that many family businesses don’t survive past the second or third generation.
Doing the work of legacy planning isn’t easy, but if you’re thinking of exploring your options, a good place to begin is to reach out to a wealth advisor to learn more or start the process.
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1 US Family Business Survey 2023
2 Global NextGen Survey 2022
3 Correlates of success in family business transitions; Michael H. Morris, Roy O. Williams, Jeffrey A. Allen, Ramon A. Avila; Journal of Business Venturing; Sept 1997
410th Global Family Business Survey 2021
5 Preparing Heirs: Five Steps to Successful Transition of Family Wealth and Values, Roy Williams and Vic Preisser, 2003 Also cited here
6 What is Facilitation? Eastern Kentucky University Facilitation Center
7 Gen Z at the Table: A Special Edition of the Next Generation of Giving, Blackbaud Institute, May 2024
8 How parents can promote resilience in the family business, Matt Allen, Harvard Business Review, Oct 2022
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