It can be difficult to ask your children whether they actually want to run the family business.
You may have spent years assuming that one of them would. They may have spent those same years trying to work out how to tell you otherwise. A polite “perhaps, one day” can carry a surprising amount of weight in a succession plan.
Their answer matters. So does the question you are asking.
Someone may care deeply about the business, want to remain a shareholder and have no wish to become its managing director. Another family member may want the job but have little interest in owning a concentrated, illiquid investment. A third may want the freedom to pursue an entirely different career.
Family business succession planning needs to make room for those distinctions. Otherwise, one conversation about “taking over” ends up carrying expectations about work, wealth, loyalty and retirement that nobody has properly separated.
Discuss management, ownership and income as three separate questions.
Who should run the company? Who should own it? How will each person's financial needs be met?
Those answers can overlap, but they do not have to. A family can retain ownership and appoint external management. A family member can work in the business without taking control. Ownership can transfer in stages while leadership changes earlier.
Family Business UK's research on ownership and wealth transfer examines these different combinations and the fairness questions they create. Its guide sets out the distinction between leadership succession and ownership transfer.
I would ask each person to explain what they want before discussing an allocation of roles or shares. What work would they choose? What level of financial risk are they comfortable with? How much liquidity do they need? How involved do they want to be in decisions?
Where relationships are complicated, a skilled independent facilitator can make that conversation easier. The financial analysis should inform the discussion without being used to close it down.
Make it possible for the next generation to give an honest answer.
There is a difference between wanting to join and being willing to avoid disappointing someone.
Ask a prospective successor what the role would need to look like for them to want it. They may be interested in running the company with clearer authority, a different management structure or a serious investment plan. They may also be giving you a considered refusal.
Treat either answer as information you need.
If someone does want the role, agree how readiness will be assessed. Relevant experience, responsibility for a meaningful part of the business and the judgement shown under pressure all matter. A surname cannot answer those questions.
PwC's succession guidance emphasises listening to the next generation's ambitions and involving willing successors in decisions and development. Read its guidance on handing over to the next generation.
It is also worth examining the job being offered. If the founder keeps the main customer relationships, overrides appointments and retains the authority to change any decision, the next generation may see responsibility without the power to do the work.
If the family wants to remain owners, define what ownership will require.
Hiring an external managing director can be a sensible option. It requires a clear relationship between the shareholders, the board and the executive team.
What decisions can management make? Which require board approval? How will performance be reviewed? What is the policy on dividends and reinvestment? Who resolves a disagreement between family shareholders?
There is a useful published example in Family Business UK's guide to non-family CEO succession. Its account of Bettys and Taylors describes an external CEO appointment that ended after four months. The guide identifies difficulties around the family's expectations, the degree of autonomy given to the CEO and the absence of clear arrangements for decisions requiring family consultation. The case is set out in the guide.
For an owner considering the same route, I would translate that into a practical task: write down the important decision rights before recruiting. A new executive needs to understand the job they are accepting, and the family needs to understand the authority it is giving them.
Good reporting supports that arrangement. Shareholders need enough information to oversee the investment without trying to run the company through informal instructions to staff.
Find out what the founder's departure will cost the business.
This is where a succession discussion becomes very concrete.
The founder may currently combine several jobs and draw income in ways that reflect ownership as well as work. After departure, the company may need to employ a managing director, strengthen finance or pay someone else to manage important relationships.
Model the cost of the work that genuinely needs replacing. Allow for remuneration already included in the accounts so it is not counted twice. Then examine the cash the business can generate after tax, investment, working capital needs and existing financial commitments.
A healthy profit figure alone does not establish that the company can fund a purchase of the founder's shares.
Take this deliberately simplified, invented example. The company generates £350,000 of annual operating cash after tax and market-rate management costs, but before changes in working capital, capital expenditure and existing debt service.
| Annual cash assessment | Amount |
|---|---|
| Operating cash after tax and management costs | £350,000 |
| Necessary equipment replacement | (£80,000) |
| Additional working capital needed | (£50,000) |
| Existing debt service | (£40,000) |
| Cash remaining before distributions, succession funding and any additional reserve | £180,000 |
Suppose the plan then assumes £150,000 a year for payments to the retiring founder and £100,000 for another shareholder's desired distributions. That is £250,000 of proposed outflows against £180,000 available, leaving a £70,000 annual shortfall before adding a contingency reserve.
The legal form and tax treatment of those payments would need advice. The immediate financial point is simpler: the plan asks the same business to fund more than the example allows.
The family can consider a longer timetable, different payments, external funding, a partial sale or changes to the business. Each has consequences. Leaving the gap inside an optimistic forecast postpones the conversation without solving it.
When nobody wants to run it, compare the available routes openly.
The relevant options depend on the company's economics, the management team and the family's objectives.
| Route | What it may allow | What needs careful examination |
|---|---|---|
| Family ownership with external management | Continued ownership without requiring a family CEO | Authority, oversight, executive cost and shareholder liquidity |
| Management buyout | A transfer to people who already know the company | Leadership capability, funding and any ongoing seller exposure |
| Employee ownership trust | Collective employee ownership through a trust | Suitability, funding, governance and current tax conditions |
| Sale to an external buyer | A route to realise value and transfer ownership | Buyer fit, payment terms, future involvement and continuity |
There may also be partial or staged arrangements. Assess them against the same set of requirements rather than comparing only their best features.
For a management buyout, enthusiasm is a starting point. The proposed buyers need to be able to lead, finance and sustain the business under the new arrangement. If the founder will be paid over time, examine the downside case and the protections available.
An employee ownership trust also needs careful assessment. It does not create cash to pay for the shares by itself, and employee ownership still requires capable management. Avoid relying on old descriptions of its tax advantages. As at September 2026, HMRC's guidance states that, for qualifying disposals on or after 26 November 2025, half the gain is exempt under EOT relief and the remaining half is subject to the normal capital-gains rules. Conditions apply. See HMRC's current EOT helpsheet.
An external sale deserves a fair hearing too. Family Business UK's guide explicitly recognises that selling may be appropriate where family management or ownership continuity is not realistic. Its guide to selling the family business explores that decision.
The family should be able to consider that route without first treating it as a failure of the next generation.
Examine fairness before fixing the structure.
An equal number of shares can produce very different experiences for two siblings.
Imagine one works full-time in the business and the other has a separate career. The working sibling wants to reinvest in growth. The other needs income or would like to sell. They may both feel that their position is reasonable.
Distinguish remuneration for work, returns on ownership and access to liquidity. Consider how decisions will be made, what information each owner receives and what happens if someone wants to leave. Have the appropriate advisers document the agreed arrangements.
These questions are easier to address while everyone is working towards a shared plan. A company should not have to discover its dividend policy during a family disagreement about school fees or retirement income.
Plan the founder's handover as carefully as the successor's arrival.
If the business will continue under new leadership, decide which responsibilities transfer, on what timetable and with what support.
An advisory role can be useful when it has a clear purpose. Specify the meetings, decisions and introductions involved. Let the new leader know when advice is available and where authority sits.
Prepare customers and staff through a coordinated communication plan. The exact timing will depend on the route and the relevant obligations, but people need to understand who is responsible for what.
Technology can help make company knowledge accessible: shared customer records, documented operating decisions, consistent financial reporting and approved tools for finding information. That work reduces the effort required for someone else to understand the company. It cannot decide which family member wants the job or resolve an unspoken disagreement about control.
I would start the next three months with four pieces of work: individual conversations about what each person wants, a financial assessment of the available routes, a review of management capability and a written comparison of the realistic options.
Give each piece a date and a responsible person. Keep an interim plan for who would run the business if the founder had to step away unexpectedly.
You may discover that a family successor does want the role, under a clearer arrangement. You may decide to retain ownership with external management. You may conclude that a sale gives the business and the family a better future.
Whichever route emerges, the plan will be stronger for having asked the question honestly.
If your family has reached this point, speak to Northbound about the financial and business questions behind the handover. We can help assess what the company can support and work alongside the legal, tax and family advisers the situation needs.