Contracts and communication among the incumbent, successor, and trusted advisors in a family business succession process

Abstract

In all phases of the family business succession process, the incumbent, successor, family members, and trusted advisors exchange information and negotiate agreements aimed at regulating the process. While the way information is exchanged varies across family businesses, it is a crucial factor that influences the success of the succession process. Through research and interviews with sixteen participants, using family communication theory and agency theory, the findings reveal that the incumbent, successor, family members, and trusted advisors have different perspectives on how communication should be structured and how agreements should be negotiated to enhance the effectiveness of the succession planning process. This study contributes to the body of knowledge in family business succession literature, particularly in how information is generated, structured, and exchanged among the parties involved in the succession planning process. Additionally, the research emphasizes the importance of contracts and agreements in guiding the succession process, ensuring the sustainability of the family business, and mitigating uncertainties related to intergenerational leadership. The report also provides recommendations on how family businesses can improve communication and close existing gaps using contracts and agreements that support succession planning and process performance. It also highlights the importance of collaborating with trusted advisors who can provide reliable external advice and knowledge.