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Earlier this year, the world watched with interest as the Murdoch family’s real-life Succession drama came to a close.

Media mogul Rupert Murdoch’s children – eyeing an empire estimated to be worth more than US$20 billion (A$30 billion) and control of the Fox Corporation and News Corporation – had disputed a change to their trust that would put control squarely in the hands of only one of his heirs, Lachlan.

A settlement was reached in September, giving Lachlan control and paying three of his siblings to exit.

But the very public and bitter battle was a classic example of the factors at play in succession planning for any family business. In addition to the business implications, it’s often fraught with emotion and power struggles.

For a country such as Australia, which is heavily reliant on family firms, these tensions matter far beyond the headlines. Understanding why succession is difficult – and how to get it right – is essential.

Powerhouse of the economy

Family-owned businesses are a crucial part of Australia’s economy. Small and medium-sized firms account for about 99% of all businesses, with about 70% being family-owned.

Surviving over time can be challenging. The “30-13-3” statistic (30% of firms transition to the second generation, 13% to the third, and 3% beyond that) is well known, despite some researchers now calling it into question.

Global evidence indicates only a minority of family firms successfully transition across multiple generations.

Emotional ties

A major part of what sets family businesses apart from other types of firms relates to what I and other family business scholars call “socioemotional wealth”.

This describes the emotional value families place on their business: legacy, identity, reputation, continuity and the comfort of keeping decision-making “in the family”.

These emotional bonds can be a source of strength. Research has shown family firms can be remarkably steady during moments of upheaval, including mergers and acquisitions and periods of financial distress because they prioritise long-term stability and trust.

But they also explain why successions can become so fraught. When leadership transitions threaten a family’s legacy, identity or long-standing traditions, emotions intensify.

Parents and earlier generations can feel they’re not just losing a role, they’re also losing a part of themselves. They may also make strategic decisions driven only by emotions, leading to conflicts, financial disruption and potential failure.

Kendall, second-eldest son of the fictional Roy family tries negotiating with father Logan in the HBO series Succession.

Openness to change

A recent study of mine adds another important layer, suggesting families adopt one of two mindsets.

One sees reality as relatively fixed, with families cautious of risks that might destabilise their legacy. The other views the business as flexible and adaptable.

These contrasting mindsets may help explain why some successions unfold smoothly – and others erupt into conflict. Families with the latter mindset tend to be more willing to let the next generation reshape the business.

The next generation

Australia is heading for a A$3.5 trillion generational wealth transfer, one of the biggest shifts of assets in its history. This will include many family businesses.

At the same time, digital transformation is reshaping every industry – from agriculture to construction to retail.

Younger successors tend to be digital natives. They often arrive fluent in data analytics, automation and artificial intelligence (AI). Many grew up in environments where constant change was the norm, meaning they naturally lean towards adaptability and flexibility.

Older leaders, particularly founders, often lean the other way. Deeply connected to the business they built, they are shaped by decades of experience and success.

The same socioemotional wealth that sustained the firm can make them reluctant to hand over control or adopt untested digital tools.

Soon-to-be-published research of mine with Nidthida Lin at Macquarie University Innovation, Strategy and Entrepreneurship (ISE) Research Centre has explored the way in Australian family firms, founder influence and long periods of stability often reinforce a mindset that favours tradition and caution. In contrast, family control and a strong desire for dynastic succession, together with the involvement of later generations, tend to encourage change and the adoption of AI technologies.

That tension, between preserving the legacy and the desire to reinvent it, is now one of the biggest challenges Australian family firms face in ensuring “the show goes on”.

Getting it right

Succession planning is not just a financial or legal process. Families need to acknowledge the emotions and feelings involved, including love, fear, grief, pride and ambition.

Avoiding these conversations only increases the risk of misunderstanding and resentment.

Other important steps for success include:

  • creating a governance structure – a clear set of rules and roles that guide how the family and the business make decisions
  • empowering the next generation to lead the digital transformation, and
  • testing the succession plan before a crisis.

Preparing early

The good news is businesses can prepare for this change well in advance. A good example of succession planning comes from family-owned Australian office supplies company, COS. COS has an annual revenue of A$300 million and more than 600 employees, as well as warehouses in every state.

When founder Dominique Lyone died suddenly in 2024, his two daughters, Amie and Belinda, had already stepped into positions as co-chief executive officers, thanks to a smooth succession plan he had initiated many years earlier.

Getting succession right is not just about choosing the next leader. It is about understanding the emotional foundations of the family, recognising the mindsets driving decisions and creating a path that makes room for the future.

This article is republished from The Conversation, a nonprofit, independent news organization bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: Francesco Chirico, Macquarie University

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Francesco Chirico receives funding from Australian Research Council (ARC) Discovery Grant, and from Macquarie Business School. He is affiliated with Macquarie University, Macquarie Business School (Australia) and Jonkoping University, Jönköping International Business School (Sweden). Professor of Strategy and Family Business, and Co-Director of the Macquarie University Innovation, Strategy and Entrepreneurship (ISE) Research Centre