The day the shares change hands is easy to name. The day a successor is actually in charge is much harder to find, and for many businesses it comes years later, or not quite at all.
Formal succession and actual succession are related, but they are not the same event. Understanding the gap between them is one of the more useful things a board, a family or an outgoing leader can do.
Which part of your business has been handed over on paper, and which part in practice?
Four things that change hands
Succession is usually discussed as one transfer. It is more helpful to see it as four, each with its own pace.
Ownership: the transfer of shares, assets and legal rights. Decision-making authority: the actual room and mandate to decide independently. Recognised leadership: the authority, trust and acceptance a successor builds within the organisation. Organisational culture: the values, habits, loyalties and unwritten rules that shape how the business works.
The first can be arranged by a notary. The second can be written into a mandate but is only real once it is used. The third and fourth cannot be transferred at all. They have to be earned and shaped over time.
Legally responsible, practically constrained
A familiar situation: the next generation holds the title and carries the legal responsibility, while the predecessor still has a decisive voice in major decisions. Sometimes formally, as a shareholder or board member. Often informally, because employees, customers and banks still check with the person they have known for years.
Nobody needs bad intentions for this to happen. Experience goes where it is asked for. But the effect is that responsibility and authority drift apart. The successor answers for decisions that are effectively shaped elsewhere, and the organisation learns that the real decision lies one step further along.
At the Succession Dinner in October, the gap between formal and actual transfer was part of the conversation. It is also visible well beyond family firms.
How a successor builds authority
Recognised leadership does not arrive with an appointment. Research into family firm succession describes legitimacy as something successors build actively, through their own roles, results and choices, rather than something handed to them by the incumbent (Appio et al., 2025). Successors also navigate outside expectations about what a legitimate succession looks like, from suspicion of nepotism to demands of merit (Hoon & Carstensen, 2025).
In practice, authority tends to grow where a successor makes visible decisions and stands by them, including ones the predecessor would have made differently. That requires space. An organisation used to one leader for decades will test whether the new leader's decisions hold, or whether an appeal to the old one still works.
When structure changes and habits do not
The fourth dimension is the slowest. Responsibilities can be redistributed on paper while meetings, informal routes and loyalties stay exactly as they were. A new organisation chart then sits on top of an old way of working.
Recent research on intrafamily succession suggests that it is driven less by formal planning than by ongoing relational negotiation: about shared identity, a shared picture of the succession and the family rules that frame it (Sallay et al., 2024). A broad review of the field likewise describes succession as a process of planning, development and onboarding, with distinct gatekeeping moments between phases (Reif et al., 2025).
Our interpretation: if those negotiations stop at the formal handover, the cultural transfer is left to chance. We explore that dimension separately in a companion piece on passing on culture.
Beyond the family business
The same four dimensions apply when a founder steps back from a scale-up, when a long-serving CEO is succeeded, when a business professionalises its management, or after an acquisition. In each case ownership or formal responsibility can change in a day, while authority and culture follow at their own pace.
The governance question is therefore less about the date of the handover and more about the sequence. Which dimension moves first? Which ones are deliberately allowed to lag? And who is responsible for closing the gap?
Sources
Reif, T., Bauer, D., Junge, S. & Hossnofsky, V. (2025). An update on family firm succession: A systematic literature review and future research directions. Journal of Family Business Strategy. sciencedirect.com/science/article/pii/S1877858525000129
Sallay, V., Wieszt, A., Varga, S. & Martos, T. (2024). Balancing identity, construction, and rules: Family relationship negotiations during first-generation succession in family businesses. Journal of Business Research, 174. doi.org/10.1016/j.jbusres.2023.114483
Appio, D., Pantalena, C., Kotlar, J. & De Massis, A. (2025). Prince or King? Bottom up leadership construction during succession processes in family firms. Politecnico di Milano. re.public.polimi.it/handle/11311/1292720
Hoon, C. & Carstensen, P. (2025). Myths and legitimacy in family business succession. Academy of Management Proceedings. doi.org/10.5465/AMPROC.2025.11037abstract
Questions worth staying with
Which decisions does the successor take today without checking with the predecessor?
Where in the organisation does the old route to a decision still work?
Which of the four dimensions has your business explicitly planned, and which has it left to time?