Opinion: as the hit TV show demonstrates, deciding the future of any family business can be quite complex

Successful entrepreneurs tend to be clever strategic planners. But even for them, one key decision poses a complex challenge and that's succession. Generational succession in the family business has become increasingly complex, both from a legal and financial perspective.

This complexity couldn't be more evident than in HBO series Succession. In the opening scene, billionaire media mogul Logan Roy stumbles out of bed in the early hours of his 80th birthday, and, confused in the dark, urinates on the carpet of his Manhattan penthouse. This moment is a stark warning of Logan marking his territory so to speak, as the controlling patriarch of the family in the ensuing series. This patriarchy reveals itself to extend beyond the family and into the family business, where conversation is almost a blood sport as he speaks to his adult children with profanities wholly unacceptable in a professional setting.

Brian Cox as family patriarch Logan Roy in Succession

Family businesses are the most dominant form of business system globally. As the family business dominates the global economic map, their economic impact is enormous. Ireland's economic landscape is also dominated by family businesses, most dominant in the services sector. For social and economic reasons, the sustainability of the family business in Ireland is necessary.

Small to medium sized family owned business are the lynchpin of the Irish economy in that they employ 68% of the workforce and generate just over half the State’s annual turnover, accounting for a higher share of services sector turnover than the EU average. Approximately 75% of all businesses are family owned, contributing to more than 50% of Ireland’s GDP and employment. This group has a 60% probability of failure as they transfer from first to second generation ownership, potentially putting thousands of jobs at risk. If a high percentage of these firms succumb to the risk of failure, a substantial burden would be placed on the local and national economy. Successful succession seriously addresses the question of continuity and how to pass on the business in better shape than it was inherited.

From RTÉ Radio 1's The Business, an interview with Ted Dwyer, the owner of Ted Dwyer Family Business, a consultancy that helps family firms to lay the groundwork for successful successions

While approximately 70% of family businesses want their business to transition to the next generation, research shows that only 30% will actually be successful. Less than 12% of these family businesses survive to the third generation and 4% survive to the fourth generation. Most worryingly, only18% of Irish family businesses in 2019 have a formal succession plan. The speed of technological change, economic pressures, the intensity of price points and sustainability interests all put pressure on the family business to remain relevant in the marketplace.

So why the disparity between the number of family business looking to succeed to the next generation and the reality of the marketplace? By definition, succession is a process that implies significant organisational change in handing over the management, ownership and assets of the business to the next generation of family members.

What makes it complex in the case of the family business is the overlap between family and business. The many practical business sides to successful succession include tax implications, assets transfers, family trusts, buy-sell agreements and wealth management. These business issues, whilst complex, are more easily addressed than the family issues of communication, family expectations, family values, family competencies and family dynamics. 

From RTÉ Radio 1's Like Family, Brenda Donohue meets families with a family business and asks what the future holds

Logan Roy’s answer to the complex succession problem is to manipulate his children into making the decision for him through deranged power-play. The series begins with Roy reneging on his promise to handover the family business to his eldest son, instead nominating his third wife as successor.  

From this point, relationships are poisoned. Connor, Logan's son from his first marriage, has little interest in being part of the family’s business beyond reaping the dividends to fund his lifestyle. Heir apparent Kendall makes various failed attempts to assume leadership, while Roman has a sordid sense of entitlement as second son. The only daughter Shiv works outside the family business, whilst her tenacious boyfriend, Tom, infatuated with the power and prestige of the family frequently humiliates himself in a bid for acceptance. Machiavellian cousin Greg is incidental to the power plays, but makes himself central to the overall family structure by storing profitable knowledge of the business and family betrayals for future leverage.

One thing they all have in common is that nothing is enough to please the family patriarch. There is to be, as Logan puts it "a blood sacrifice" laid at the feet of shareholders to keep the family business afloat. You wonder if they are waging war against each other or against their competitors.

Whilst the family plotting and backstabbing in Succession may be almost Shakespearian, the problems faced by the family business are without doubt very relevant. Very often the key issue to be considered in succession concerns the suitability of any family member to take over the business. Do they have the skills, experience or even interest? Research shows that succession is successful when there are clear and consistent succession intentions communicated and documented between family members.

Having a clear and transparent plan for the future ensures successful succession where all members of the family are aware of the role they'll play in the future 

Developing a family forum to deal with any potential conflict through training, education and mentoring would help the family business survive and thrive. Having a clear and transparent plan for the future ensures successful succession where all members of the family are aware of the role they’ll play in the future of the business, be it inside or outside the family business. Logan Roy, take note. 

The views expressed here are those of the author and do not represent or reflect the views of RTÉ