Family business succession: when the title passes but the founder keeps the power
The successor signs, but suppliers, banks and staff still look for the founder. We explain why it happens, which signs show the transition is stalling and how powers, relationships and roles are really handed over.
A generational handover is complete when the designated successor has not only the title but also the powers, the relationships and the authority to decide. If suppliers, banks and staff keep turning to the founder, the handover exists only on paper. The company has two centres of command, and the ambiguity slows everything down. There are three ways to correct it. Write down delegated powers and roles. Hand over relationships one by one. Give the founder a new role that is explicit and has clear boundaries.
A typical scenario. Eight months after the successor was appointed chief executive, suppliers still call the founder. The banks want to talk to the person who stands as guarantor for the loans. Before carrying out an instruction, staff check with the person they have always answered to. On paper the successor is in charge. In practice the founder still is, and meanwhile complains about being unable to step back.
Why does power stay with the founder even after the appointment?
In most cases nobody is acting in bad faith. The handover stalls because it was decided who signs, but not who is in charge. There are four typical reasons.
- Relationships are personal. Customers, suppliers and banks built their trust with a person, not with a job title. If no one transfers those relationships explicitly, they keep looking for that person.
- Ownership has not passed. The successor runs the company, but the shares stay with the founder. At the shareholders’ meeting the owner still decides, and everyone knows it.
- The founder is still the guarantor. If the founder has personally backed the credit lines, it is natural for the bank to want to talk to the person who signed.
- The founder’s role has not been redesigned. For someone who built a company, giving up command means changing identity. Without a new role, the founder slips back into the old one.
Which signs show the transition is stalling?
Some signs recur from one company to the next.
- The successor does not decide alone on anything above quite modest thresholds, even on operational matters.
- The founder attends meetings to which they are no longer formally invited.
- Long-serving managers skip a level and go to the person who used to be in charge.
- There is no document on delegated powers, signing authority and responsibilities, only a verbal agreement within the family.
- The change was never properly announced to customers, banks and suppliers. People were simply left to find out.
- Important decisions are taken “over dinner”, outside the company’s governing bodies.
When two or three of these appear together, the transition is already going off the rails. That is happening now, not in a few years’ time.
What breaks when there are two centres of command?
At first the accounts hold up. Turnover holds, and so do margins, for a while. What breaks is the chain of command. Staff do not know who they answer to, middle managers lose heart and decisions slow down. The ambiguity also gives room to anyone who wants to take advantage, such as a minority shareholder, a disgruntled manager or a competitor that senses instability.
It is an organisational crisis before it is a financial one. But if it lasts it reaches the numbers, with signs that show up before the accounts. Customers cool, suppliers grow more cautious and good people leave.
How do you make the handover real?
A generational handover should be treated as a project, with a diagnosis, a plan and dates. These are the main levers.
| Lever | What is done | Who handles it |
|---|---|---|
| Map of real power | Work out who really decides on what, from customers and prices to hiring, banks and investment | Family and management, with an external adviser |
| Delegated powers and signing authority | Matters, thresholds and signatures are put in writing, with powers of attorney filed where needed | Board of directors, notary |
| The founder’s role | A new and limited role, with a review date. It could be chair without executive powers, adviser on specific matters or point of reference for some long-standing customers | Founder and successor |
| Relationships | Joint meetings with the main banks, customers and suppliers, at which the founder introduces the successor | Founder and successor |
| Guarantor positions and financing | A review with the banks of the founder’s personal security and of the names in the contracts | Finance department, lawyer |
| Team | An operations director and a head of finance who report to the new leadership | Successor, HR |
| Communication | An internal and external announcement, with dates and contacts | Management, communications |
Alongside these levers there are legal tools, to be assessed with the notary and the lawyer. The first is the family pact (patto di famiglia) under Article 768-bis of the Italian Civil Code. With it, the business owner transfers the company or the shares to one or more descendants, with the involvement of the spouse and the other forced heirs, meaning the heirs entitled by law to a share of the estate. The others are shareholders’ agreements, clauses in the articles of association on pre-emption and on the approval of new shareholders, and a board of directors with at least one member from outside the family.
In many cases the solution is not to push the founder out. It is to redefine the founder’s role explicitly. The difference between a founder who helps and one who holds things back is not a matter of character. It lies in having written down what the founder can and cannot do.
When do family members and shareholders need a third party?
Some transitions get complicated because the conflict is not only between generations. It is between siblings, between branches of the family, between those who want to sell and those who want to carry on. It is the same dynamic as three shareholders who can no longer decide together, with the added weight of family ties.
In these cases you need someone who belongs to none of the parties, and a place to talk where conversations do not leave the room. That is the work of Blackroom, Strategic’s confidential advisory service for owners and boards. Access follows an assessment. A non-disclosure agreement (NDA) is signed before discussing the substance. The family’s lawyers and accountants are involved in the parts within their remit.
What do you communicate, and to whom?
A well-communicated handover is a strength. It tells customers and banks that the company has a future beyond its founder. A handover that simply happens to the company, and that people hear about through rumours among suppliers or a press article, becomes a reputational problem on top of the organisational one.
It pays to decide these points in advance.
- Who announces the change, and in what words.
- In what order staff, key customers, banks and suppliers are told.
- Who answers questions in the weeks that follow.
- How the founder’s new role is presented, so that no one reads it as a forced exit.
Why is the successor alone not enough?
Often the problem is not the successor but what is missing around them. It might be an operations director who knows the company but is not part of the family. It might be a head of finance who answers to whoever is in charge today, not to whoever was in charge yesterday. Or it might be someone who can handle the discontent of middle managers who feel bypassed. Defining these roles and choosing the right people to fill them is a job in itself, described on our page on critical roles and succession.
The record of past decisions must also be handed over to the new leadership. It is one of the uses of our Company Brain for organisations, the company’s own searchable memory.
In brief
- A generational handover is complete when powers, relationships and authority pass, not just the title.
- It stalls when people decide who signs but not who is in charge, and when ownership and the guarantor role stay with the founder.
- Written delegated powers, relationships handed over in person and a new role for the founder are the main levers.
- The family pact, shareholders’ agreements and the articles of association are assessed with a notary and a lawyer.
- Planned communication turns the change into a sign of strength.
Frequently asked questions
Does the founder have to leave the company?
Not necessarily. The founder’s contribution often remains valuable, for example with some long-standing customers or as an adviser on specific matters. What matters is that the new role is written down, limited and known to everyone, staff included.
What is a family pact?
It is the contract, provided for by Articles 768-bis and following of the Italian Civil Code, by which a business owner transfers all or part of the company, or their shares, to one or more descendants. It is executed as a notarial deed, and the spouse and the other forced heirs take part too. It gives the handover stability, but it should be assessed with a notary. For San Marino companies the framework is different and needs to be assessed case by case.
How far ahead should you start?
Start as early as possible, and in any case years before the planned date. Handing over relationships, building the team around the successor and reviewing the founder’s guarantor positions and the articles of association all take time. It works best while the founder is still fully active.
Who should tell banks and customers about the change?
Ideally the founder and the successor should do it together, in the same meetings. The founder’s presence transfers trust. The successor’s presence shows who the point of contact will be from then on.
When the handover touches family balances and decisions that cannot be discussed in the usual places, the Blackroom page explains how a confidential discussion is set up, from the first conversation to the decision.
Sources
Consulted on 16 September 2026.
Find out moreBlackroomFor owners and shareholders: shareholder disputes, generational handover, sales of the business and other delicate moments, under a non-disclosure agreement.
