Many family business owners often assume that their kids will eagerly step in and take over the day-to-day responsibility for running the business. And so the logic goes, they will either buy out your ownership (likely over time and likely at a discounted price, though) or run it after you retire and allow you to continue to receive passive income and distributions from the business. That’s the exit plan, right? Well, that assumption is risky and dangerous, and may be quite unrealistic.
Why is that? Increasingly, younger family members are choosing different career paths.
The data: a growing generational divide
Recent global surveys paint a consistent picture: enthusiasm for taking over the family business is declining fast.
- According to PwC’s 2023 Global Family Business Survey, only 28% of next-generation family members say they intend to take over leadership of the family firm — down from 39% in 2018. Yet nearly 64% of current leaders still expect their children to do so, revealing a wide expectation gap.
- The EY & University of St. Gallen NextGen Barometer (2023) found that just 35% of next-gen respondents “definitely” plan to become the principal owner or CEO, while nearly half (48%) said they’re more interested in starting their own ventures than inheriting an existing business.
- The STEP Project Global Consortium and KPMG (2023) reported that only 24% of family firms worldwide have a formal, communicated succession plan. Among those without one, more than 60% said their likely successor “has not yet shown interest.”
- In the United States, the Small Business Administration (2024) estimates that fewer than 30% of family-owned businesses transition successfully to a second generation — and only 12% survive into a third.
- Supporting the broader trend, Pew Research (2023) found that Millennials and Gen Z rank “meaningful work” and “flexibility” as their top career priorities, above “family legacy.” Fully 71% expect to change careers at least once before age 40.
In other words, family business owners and founders are counting on successors who may not exist.
Why younger generations are saying “no” …
1. Different Career Priorities
Younger workers often value flexibility, purpose, and personal autonomy over stability or continuity. They’ve grown up seeing entrepreneurship, remote work, and side ventures as legitimate alternatives to traditional ownership.
2. Educational and Geographic Mobility
With more next-gen members earning degrees and building networks elsewhere, fewer live near the family firm’s base of operations. For many, taking over would require moving home — often a nonstarter.
3. Risk and Financial Realities
High student debt, expensive housing markets, and volatile industries make stable employment more appealing than assuming operational risk in a smaller, privately held firm.
4. Governance and Family Dynamics
Poorly defined roles, inconsistent compensation, or opaque decision-making can make joining the family firm feel like stepping into a minefield. Without professional governance, next-gen leaders hesitate to step into a role that requires seemingly impossible trade-offs.
5. Value Alignment
If the business appears outdated — on sustainability, technology, or culture — younger family members may not see their personal values reflected in it.
6. Attractive Outside Options
Globalization, startups, and digital industries offer abundant alternatives. For many younger professionals, joining the family business feels like closing off more dynamic possibilities.
What this means for business owners
If your exit strategy assumes family succession, these realities should be a “wake-up” call for you to be proactive, not reactive or passive, in making your future goals/plan achievable. First, you need to ask – don’t assume anything. Business owners should conduct candid, structured conversations with family members to gauge real interest and constraints. In some circumstances, you may even want to do a blinded survey of younger family members to ensure that their responses are genuine and not what they think you want to hear. Most importantly, treat the results as critical data, not disappointment.
If family members do express an interest or desire to join the family business, think about what you can do to make that path easier and increase the likelihood that the next generation will be successful. Adding outside (non-family) professional management and independent (non-family) board members that can mentor and guide the next generation is a great way to support your kids, nieces/nephews or grandkids, and reduce their anxiety about going into the family business. You can also create formal written, well-defined roles and responsibilities for all key positions in the business, as well as well-documented and transparent fair compensation parameters and guidelines that will governing family member pay. You may also want to create advisory roles or project-based roles to allow younger family members to “try on” the business without having to make a full-time commitment.
Bringing in independent professional managers and experienced non-family board members has other benefits… it reduces risk within the business and increases the likelihood that your business will see improved growth and financial performance… and it increases the probability that the business can raise and comfortably service additional third-party financing (debt and/or non-control equity) that can be used to pay you for your shares.
The ExitMinded takeaway
Proactive, early planning is essential. Don’t assume the next generation will take over. Treat successor interest like a business asset — something that must be validated, developed, and, if necessary, replaced. The closer you are to your target exit date, the more costly last-minute succession gaps become. Proactive governance, open conversations, and early professionalization preserve both options and enterprise value.