Family Business Succession Failures Often Follow CEO Transitions, McKinsey Finds

Family-owned businesses frequently underperform for years after leadership changes, according to new McKinsey research covering more than 200 companies across 50 countries.

The family business succession study found average shareholder returns fell by 5.7 percentage points during the five years following a CEO transition.

McKinsey said the decline occurred regardless of whether the successor was a family member or an external executive, suggesting that family business succession problems are often linked less to successor quality than to how outgoing leaders manage the transition process.

The consultancy warned that departing CEOs can undermine succession by leaving too abruptly, failing to resolve internal conflicts or outdated structures before departure, or remaining overly involved after stepping down and weakening the authority of new leaders.

McKinsey said the most successful family business succession outcomes are planned years in advance with clearly defined governance structures, transparent handovers and formal roles for former chief executives.

The findings highlight growing pressure on family-owned enterprises and family offices to professionalise governance as intergenerational wealth transfers accelerate globally.