Succession risk or smart move? Why Gen X is increasingly missing out on the family business

Family business owners are increasingly choosing to pass leadership directly to grandchildren rather than to their own children.

It’s a shift that reflects changing demographics, longer leadership tenures and evolving views on legacy, according to Ben Persofsky, Head of the Center for Family Business at Brown Brothers Harriman, who has been sharing his insights with InvestmentNews.

This “skipped generation” succession pattern is emerging now largely because founders are remaining active in their businesses for longer than previous generations. As Persofsky explains, “This pattern is emerging largely because owners are living and leading for longer, all while keeping their identity deeply rooted in their business.”

He adds that succession itself is being reimagined as a longer process. “These owners are thinking of succession as a longer transition, potentially spanning a decade or more,” he says.

In that context, some founders question whether Generation X successors have enough time to lead before passing the baton again. “They sometimes perceive Gen X as having a shorter leadership runway relative to the time required to instill the values, mindset, and priorities needed to maintain a business legacy,” Persofsky notes.

Instead, attention is turning to younger family members who can steward the business over multiple decades. “Rather than handing over control to a near-peer-aged successor, founders may look to grandchildren who can steward the enterprise for 30 or 40 years,” he says, emphasizing that what looks like a generational skip often reflects “delayed exits, longer lifespans, and heightened concern about long-term continuity.”

Benefits of youth, risk of tensions

Younger successors can also bring distinctive strengths and as Persofsky observes, founders frequently see “early fluency in technology, data, and new business models, along with comfort navigating rapid change and uncertainty.”

He adds that Millennials and Gen Z leaders can be especially attuned to long-term transformation.

“They can also sometimes sense where a long-term market is going and develop innovative ideas to follow it. Their time horizon allows them to see through long-tailed initiatives to transform a business that can take a decade or more,” he says.

However, skipping a generation can create significant family dynamics challenges if not handled carefully.

“When Gen X is sidelined without transparency or substantive alternative roles, the fallout is less about financial impact and more about strained relationships stemming from exclusion,” Persofsky warns.

Such tensions can undermine governance long before they affect performance. He explains that resentment and disengagement can lead to “erosion of institutional knowledge, and fractures within the family itself,” which can “quietly then erode governance and general decision-making.”

Successful succession plan

Families that navigate these transitions successfully often ensure the middle generation retains meaningful influence.

According to Persofsky, this can mean “a respected voice in governance through boards, owner councils, or stewardship roles,” while also recognizing the value of their deep operational knowledge.

Formal governance structures can also help multiple generations stay engaged even when leadership authority shifts. Persofsky stresses that “governance structures only provide scaffolding for making decisions,” noting that authority alone does not guarantee sound judgement.

What matters most is inclusivity in how decisions are reached. “Having the authority to make decisions doesn’t automatically mean the people who have it have all the perspectives needed to make good decisions,” he says, adding that inclusive processes allow older and middle generations to “contribute insight, exercise oversight, and remain connected to purpose without having to be involved in day-to-day operations.”

Despite these tools, governance missteps frequently undermine multigenerational transitions. Persofsky points to “the exclusion of important voices in a conversation, a lack of role clarity, and underestimating the emotional side of a transition” as among the most common mistakes.

Ownership vs. management

Families often struggle to distinguish between ownership and management roles, he says, leading to confusion and blurred boundaries. Another frequent oversight is failing to define the outgoing leader’s role, leaving them “in an ambiguous state between control and retirement.”

In Persofsky’s experience, skipped-generation transitions that succeed tend to unfold gradually rather than abruptly. “Much like more typical and successful generational transitions, they work best when the transition is neither abrupt nor surprising,” he explains.

He recalls one manufacturing business that recognised declining demand and ultimately rallied around a younger leader with a clear vision for the future. The decision emerged after extensive dialogue between generations, with both the father and grandfather committing to mentorship and board-level oversight. This collaborative model, Persofsky says, enabled the company to pivot more quickly while ensuring “all three generations feel included.”

For founders focused on preserving culture and values, naming a successor is only part of the equation.

Persofsky notes that “legacy is largely a rear-looking word,” reflecting how individuals reconcile what they have already achieved with how they wish to be remembered.

He emphasises that durability matters more than symbolism. “Ultimately, a successor choice is important as it can determine whether a legacy carries on. But the durability of the things that matter — the business’s values, mission, and culture, for example — at passage matter far more,” Persofsky says.