Why succession is the wrong starting point
- Christopher Eddison-Cogan
- Apr 3
- 4 min read
Updated: Apr 5
FAMILY ENTERPRISE SERIES: Article I.
This article forms part of our ongoing work on family enterprise, exploring how businesses and wealth can be sustained, governed and transferred across generations.
Family businesses are often advised to begin with succession. Who will take over? When should control pass? How should children be treated fairly? What happens if one family member is capable of leading and another is not?
These are sensible questions. They are rarely the right starting point.
In most established family enterprises, succession is not the central problem. It is the moment when deeper tensions become visible. By the time the succession question arrives, structural weaknesses have often been present for years.
A business that depends too heavily on one individual, one relationship, or one set of informal understandings (a Founder Business) is already vulnerable. In that setting, succession planning can become an attempt to solve in one transaction what should have been addressed through enterprise design over time.
Are continuity and succession the right choices?
What's needed first is a decision as to whether the business should be handed on at all, or whether there should be an alternative plan to preserve the value created, usually an IPO, a merger or a trade sale.
This series of articles provides a framework for thinking about continuity and succession.
Succession planning assumes the structure already works
Much succession advice begins from an unspoken assumption that the enterprise is already capable of enduring change.
It assumes that:
ownership and control are sensibly aligned
decision-making is understood and respected
key contributors are motivated to remain
authority can pass without destabilising the business
the enterprise can absorb change without losing coherence
In practice, many private companies approaching generational transition are more fragile than they appear.
The founder may still be carrying the strategic judgement, the commercial credibility and the emotional centre of gravity. Other participants may hold titles, expectations or shares, but not the practical authority or capability required to sustain the enterprise through change.
In those circumstances, succession is not the first challenge, it is the point at which hidden fragility is exposed.
The real question is whether the business can survive change
The more useful question is not who comes next.
It is this: Is this business capable of surviving change at all?
Change may come through:
retirement
incapacity
death
divorce
disagreement between family members
loss of a key manager
lender or investor pressure
the gradual passage of time
If the enterprise only functions while one person is holding everything together, succession planning is already arriving too late.
Why succession planning often disappoints
Succession plans tend to fail for reasons that are predictable.
Control may pass to someone who is not equipped, not trusted, or not genuinely willing to exercise it. Ownership may fragment among beneficiaries with very different levels of commitment and different financial needs. Non-family contributors may conclude that they have no meaningful future and leave. Emotional claims may harden into entitlement. Advisers may focus heavily on tax without sufficient attention to governance and enterprise health.
At that stage, succession becomes a negotiation between individuals rather than a structured question about how the enterprise should continue.
That is an unfair burden to place on family relationships.
Healthy succession is downstream of structure
Sound succession is an outcome of a well-designed enterprise. It is not, on its own, a reliable technique.
It usually rests on earlier answers to harder questions:
Who should hold authority, and why?
How should long-term family benefit be distinguished from day-to-day control?
How should contribution be rewarded without creating permanent entitlement?
How should external influence be welcomed without compromising autonomy?
How can governance withstand personal tension or disagreement?
Until those questions are addressed, succession planning can remain largely cosmetic.
You may be deciding who inherits the steering wheel before designing a vehicle capable of making the journey.
Reframing the issue
For many business-owning families, the most important change is a change in framing.
Instead of asking, How do we pass this business on?
It is often better to ask, What kind of enterprise is actually capable of being passed on?
That shift changes the conversation:
from inheritance to institution-building
from short-term fairness to long-term durability
from personal expectation to enterprise design
Succession then becomes one chapter in a longer story, rather than the whole story itself.
Looking ahead
In the next article, we look at one of the deepest sources of difficulty in private family businesses: the hidden conflict between inheritance thinking and enterprise thinking, and why treating a business like part of an estate can damage the very value a family is trying to preserve.
Next in the series: II. "The hidden conflict between inheritance and enterprise"
Discussing your situation
Business-owning families often reach a point where succession questions begin to surface, but the real issue lies deeper in governance, control and continuity. Eddison Cogan Lawyers advises on family and business structures where personal relationships, ownership and long-term planning intersect.
About the author
Christopher Eddison-Cogan
Solicitor & Managing Partner, Eddison Cogan Lawyers
Christopher advises individuals, families and business owners on complex family, commercial and governance matters. Dual-qualified in England and Wales and Australia, his work often sits at the intersection of legal structure, financial planning and family dynamics.
He has particular experience in advising family enterprises and closely held businesses on succession, governance and long-term continuity, with an emphasis on coordinated and carefully structured outcomes.
Further articles in this series on family enterprise:
I· Why succession is the wrong starting point
II· The hidden conflict between inheritance and enterprise
III· Control, ownership, work and capital are not the same thing
IV· Why talented people leave family businesses
V· The potential danger of external capital
VI· Why clever tax planning is not enough anymore
VII· From founder business to enduring family enterprise
The following note is included for clarity and completeness.
This article is provided for general information only. It is not legal advice and should not be relied on as such. The law and tax treatment may change, and the appropriate structure for any family enterprise will depend on its ownership, governance, financial position and the individuals involved. Reading this article does not create a solicitor-client relationship.