Much academic time and effort have been spent optimizing the handover from one generation to the next. Most of the literature derives its source from CEO succession plans adapted to family businesses and its succession planning.

The need for optimal succession is clear: the better the succession is planned and executed, the more successful the family business will be. Acrimonious situations after the founder’s death can be avoided and we all live happily ever after.

As the thinking goes so far, the successor needs to have the incumbent’s full support; this support must also be shared among most, if not all other, (relevant) family members. Then, the successor needs to have the right technical and leadership skills to rival or exceed the incumbent’s skill set. Finally, the incumbent needs to bow out gracefully, the curtain closes, claps, and that’s the end of Act 1. After drinks in the lobby, we’ll begin with an exciting Act 2.

But is it that simple?

Succession Planning and External Advisors

As many practitioners know, it is neither easy nor as straightforward as described above.

A paper I read recently shows another aspect that needs a bit more reflection: the benefits of having an external advisor as a mentor or part-time cheerleader for the succession plan.

The important part to note here is that the external advisor is not to stay indefinitely. His role is strictly defined as a temporary one and he bows out himself after having achieved the objective. As a small side note: this is why we encourage family councils to start building up their family governance muscles through our modules. The last section of the modules is dedicated to establishing a workflow that is defined and managed by the family itself – without the need for outside mentoring (LINK).

It can be a curse to be born into a family business: In most cases, it is expected/implied/least damaging (pick whichever suits your case) to keep management in the family. There are many advantages to this, but there are as many disadvantages to this aspect of a family business. Academia – if we want to go back to the ivory tower – will outline the difference between stewardship (what you would want as a family business; essentially looking after the family business for the next generation – akin to Patek Philippe’s fantastic ad: “You never actually own a Patek Philippe. You merely look after it for the next generation”) and agency theory. Agency theory refers to the difficulty in managing the different objectives an agent (being an external manager or a family member) may have that might run contrary to the shareholder’s intentions. The way out of the problem is to set up control mechanisms, which itself can be seen as distrusting a family member from doing their best for the common (family) well-being. This could also form a source of contention. In any case, a problem often is that if the family wants to keep management “in-house”, then we’ll have to deal with a limited talent pool, nevertheless (I am not saying it’s going to be a qualitatively bad talent pool, just numerically, the numbers will not be substantial).

The three attributes of a successor

One aspect is to prepare the successor for his role. This can come in the form of the external advisor providing guidance or mentoring to the successor and helping him find his voice and style of leadership. In the best case, the external advisor is fit enough to be a role model for the successor.

The limited talent pool mentioned above will have to provide a person that has three attributes to succeed as a leader:

  1. Individual internalization
  2. Relational Recognition
  3. Collective Endorsement

So, let’s go through the three attributes step by step: The first one, Individual Internalization, describes the individual himself. Does he want to do the job, and has he got the necessary skills to do it successfully? Too often, we uncover the first mismatch between what the family wants and what the chosen successor wants. Sometimes he doesn’t want to take the job. He sees the job more as a burden than anything else. Also, social aspects may play a role, where the firstborn, preferably a son, has to take on the succession. If you have someone in the family with the necessary Individual Internalization – and you work from a limited talent pool – choose the one who has the aptitude and the willingness to do the job. This may not be the firstborn in the family. Further down the line, being open-minded on this topic will repay you manyfold.

Relational Recognition describes how the chosen successor is then viewed by his peers or within the family company. Will he be viewed as “he only got the job because he’s the son”, or will he be seen as “made out of the same old oak as his dad”? “Plonking” a family member into the management of a company will usually not be seen as a positive as other non-family members in leadership might have vied for the job also. This can breed a lot of resentment and ill will. Furthermore, the feelings of employees can turn profoundly negative and destructive or into counterproductive behavior where employees set up traps and wait for the son to fail in a search for leveling the playing field. This is to be avoided through a more long-term approach and having the son not merely start at the manager level but begin at a more menial, lower level, where people of his age-group work. These co-workers can then later, as they rise through the ranks, be an essential support base for the successor.

Collective Endorsement, finally, is the Recognition of the succession by other family members. Not too uncommon is the endorsement of the succession plan, in the beginning by all family members. As other branches’ children become older, they want to secure those jobs for their family branches, thereby questioning the original succession plan and starting to torpedo the original successor (or at least making internal politicking more complicated and gruesome).

  • The first attribute, Individual Internalization, focuses on the successor. Here the external advisor can help find and build the necessary unique abilities that the successor needs to bring into the appointed role. What are the necessary skills anyway? Do the skillsets of the incumbent suffice in today’s market, or has the business developed in a way that requires new skills? Once the skills have been mapped out, how is the succession communicated to the wider environment (both internally, i.e., in the family, and externally, i.e. in the family business or wider community)?
  • With the second attribute, Relational Recognition, the external advisor can be of invaluable help to the successor in supporting his leadership bid. Placing the successor in the right positions, where he can gain the right experience and expertise needed for the next jump. At the same time being aware of the internal dynamics of the family business. The external advisor ideally holds a position within the family business to this effect (either in senior management or at the board level). It is not too far a stretch of the imagination to establish a specific board position to this effect in larger family businesses, considering the importance of a successful transition from one generation to the next.
  • Finally, the external advisor can aid the successor and the incumbent in the Collective Endorsement by reminding and influencing family members to “stick to the plan”, by communicating with other family members specifically on the topic of succession planning and how the plan is developing. Finally, the external advisor should provide support and cover against critical voices from within other family branches so that the successor is not dissuaded from attaining the position. A healthy level of criticism should be encouraged, but the level of criticism should not exceed a level of decency that results in the Individual Internalization breaking away completely and the succession plan is thrown into disarray just because a family branch “barked the loudest”.


The external advisor takes on an important role in succession – a role that might have been undervalued so far.

The external advisor’s limited tour of duty centers around three topics:

  1. Leadership promotion – is the identification and development of the successor’s unique abilities, and the communication of the succession plan executed in a structured way?
  2. Leadership defense – is the successor defended from unjust and unfair criticisms and obstacles from within the family business and the family itself?
  3. Maintaining and developing the family followership – how are the communication channels between the family and the successor kept open and can all involved parties “stick to the plan”?

All this needs to be established and achieved within a limited time frame given so that when the external advisor bows out gracefully, the successor and the family (and the family business) are in the best possible position to forge their future path.