The succession series: the great wealth transfer

Part one of a six-part series on succession planning for family businesses by Elena Grima Tortell, Senior Associate, Deloitte Legal. Succession demands more than legal and financial planning; it is personal, emotional, and requires strategic vision. This series offers practical insight into leadership dilemmas, rising-generation readiness, family offices, and governance for Maltese businesses preparing for generational change.

We are living through the largest intergenerational wealth transfer in human history. Trillions of euros are moving hands, from one generation to the next, reshaping family businesses, economies, wealth structures and legacies across the globe. For family business owners, this moment represents both extraordinary opportunity and significant risk. In Malta, 75% of businesses are family run or family-owned (according to a survey conducted by the Malta Chamber of Commerce, Enterprise and Industry between November and December, 2022), and we are not immune from global trends: the shift is already underway. The real question is whether families are ready for it. 

 Within the next 10 years, the baby boomer generation, who are now in their 70s and 80s, will transition their businesses and wealth to their children and grandchildren. Despite this urgency, most family businesses remain unprepared, with only about a third of family businesses having a documented succession plan, according to a recent survey carried out by the Malta Chamber of Commerce.

The consequences can be severe. Only 30% of family businesses survive into the second generation, 12% into the third, and just 3% into the fourth. These are not abstract statistics; they represent lost legacies, displaced employees, and unfulfilled economic potential.

Given the central role family owned and run businesses play on our island, the fact that many, statistically speaking, are not prepared for an eventual transfer, may impact not only the family in question but also have a direct impact on the country’s economy.

Why this matters

Too often, businesses fall victim to the systemic ‘third-generation curse,’ whereby the second generation fails to pass the business successfully to their children. This is rarely due to poor profitability or the absence of a strong product or service, but usually results from a lack of deliberate, forward-looking planning. As businesses evolve from the start-up phase to more profound levels of business maturity, their priorities must change. Governance needs strengthening, structures must be formalised, and family dynamics should be separated from business decisions. While operational issues will always remain important, the focus must shift to long-term vision, strategic continuity, and developing future leaders. Succession planning should be a clear, structured, and actionable priority – not a matter always pending. The third-generation curse is preventable.

What successful succession looks like

Families that take proactive steps can shape their futures. Those who delay action until a crisis occurs, such as a health scare, risk surrendering control over the future direction and stability of their business. 

Starting a succession planning process can often be intimidating or unclear. There is rarely an obvious starting point, and facing questions about leadership, ownership, and legacy can be uncomfortable. Yet, true succession success is predictable, not dramatic. It’s a smooth transition where everyone understands the plan, knows what to expect, and feels confident about the future. It is about readiness: readiness to step-up, and equally, readiness to let go.

While governance structure and tax planning are key outcomes of a good succession plan, they are not the ultimate objective. The true cornerstone of successful succession is clear communication, transparent planning, and genuine family engagement around shared values, expectations, and the future.

The process begins with honest conversations. Family business owners must ask: What does succession mean to my family? What values do we want to preserve? Who is prepared to lead? What if the next generation doesn’t want to continue the business? These tough questions require deep reflection from a leader, but they are an essential baseline for retaining control over the outcome, whether that means safeguarding their legacy or choosing the right exit strategy. 

Time to act 

Succession is not a distant concern; the wealth transfer is underway. Families who recognise this early will gain a competitive advantage. The sooner planning begins; the more options are available and the smoother the transition. Delay limits choices; preparation expands them.

Creating a succession plan requires discipline and intention: preparing the next generation, building effective governance, and fostering open family dialogue all take time and effort. Succession is not a single event, but a process that rewards foresight and courage.

The best time to start planning was ten years ago. The second-best time is today.