How Family Businesses Should Plan for Generational Success
Family-owned businesses generate 70% of global economic output and 60% of jobs, yet only 3 in 10 survive to the second generation and 1 in 10 to the third. Success depends on thoughtful succession planning, clear governance structures, professional management where needed, and maintaining flexibility to adapt as families and businesses evolve.
Summary
This Goldman Sachs Exchanges episode features FX de Malman (chairman of Goldman Sachs EMEA and Investment Banking) and Tucker York (chair of global wealth management) discussing generational succession in family businesses. The conversation opens with striking statistics: family-owned businesses represent over 32 million entities in the U.S. (80% of all businesses), account for 60% of GDP and workforce, and comprise 35% of Fortune 500 companies. Globally, family businesses dominate sectors including luxury goods, beauty, shipping, consumer goods, retail, and industrial markets, particularly in Asia where large family conglomerates control multiple economic sectors. De Malman explains that family ownership creates advantages because owners are both financially and emotionally invested, leading to long-term thinking, disciplined capital allocation, and prudent leverage use. These businesses statistically outperform non-family controlled competitors. York adds historical context, noting that family business structures are ancient but have been partially displaced by modern corporate structures and permanent capital sources. The critical moment comes during generational transition when founders must decide: (1) whether family members should be involved in management, and (2) how to transfer ownership to the next generation. Only about half of family businesses have succession plans, and only a third formally document them. De Malman identifies founder preoccupation with current business operations and difficulty making hard judgments about family capability as barriers to planning. York emphasizes that succession planning is complicated because it involves not just founder preferences but also next-generation desires, plus the changing nature of families themselves. Both speakers advocate for written plans with built-in flexibility to adapt to unforeseen circumstances. When scaling requires external capital, families face choices about IPOs, bringing in investors, or selling outright. De Malman notes that third-party investors can serve as discipline mechanisms and solutions for consolidation, but sales carry emotional weight since family identity is often tied to the business. York emphasizes the shift from managing a business to managing wealth after a liquidity event, and the divergence between first-generation founders (who have limited time for capital management) and subsequent generations (who inherit responsibility for stewardship). As generations pass, business interests may diverge from family interests, requiring clarity on alignment points. Both speakers stress the importance of long-term, diversified investing—contrasting the concentrated bets that built these family fortunes with the portfolio approach advisable for most investors. The conversation concludes that successful families play the long game, remain invested through cycles, adjust decisions based on experience, and maintain disciplined stewardship while attracting strong management.
About this episode
Companies with significant family ownership generate roughly 70% of global economic output and 60% of the world’s jobs. However, only three in 10 survive to a second generation. In this episode of Goldman Sachs Exchanges, FX de Mallmann, chairman of Goldman Sachs EMEA and chairman of Investment Banking, and Tucker York, chairman of global Wealth Management, discuss why succession is so difficult, how enduring enterprises structure governance, and the mindset shift required after a sale or IPO. Key Takeaways Succession is a two-part decision: Founders must separate management continuity from asset ownership transfer. This process yields the best results when initiated early and built with operational flexibility. There are multiple paths to business success: Company success has come from both founders who diversified ownership and brought in professional management, and founders who kept the business family-controlled and managed. Wealth creation demands a mindset shift: Through a sale or IPO, founders go from operating a concentrated business to holding liquid wealth and trying to understand what to do with this. For more insights, read Goldman Sachs’ new report, Honoring Legacy and Positioning for the Future: A Modern Playbook for Family-Owned Businesses. Date of recording: September 8, 2026 The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment, legal, or tax advice, a recommendation from any Goldman Sachs entity to take any particular action or be used as a basis for any other investment decision, or an offer or solicitation to purchase or sell any securities or financial products. Any forward-looking statements, case studies, computations or examples set forth herein are for illustrative purposes only. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any sponsorship, affiliation, endorsement, ownership or license rights between any such company and Goldman Sachs. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs. A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. © 2026 Goldman Sachs. Learn more about your ad choices. Visit megaphone.fm/adchoices
Key Insights
- Only 30% of family businesses survive to the second generation and 10% to the third generation, not because of inherent failure but because founders must make active choices about whether family involvement or broader ownership serves the business better.
- Family-owned businesses outperform non-family controlled businesses on average because owners take long-term views, maintain discipline in capital allocation, and are emotionally invested in stewardship rather than short-term returns.
- The two critical decisions founders must make during succession are whether family members should manage the business and how to structure ownership transfer, but these decisions are often delayed because founders prioritize current business growth over long-term planning.
- As families expand across multiple generations, their interests increasingly diverge from business interests, making it essential to separately clarify where family goals and business objectives align versus conflict.
- Many families struggle to shift from managing a concentrated business asset to managing diversified wealth, with first-generation founders typically avoiding capital management responsibilities while subsequent generations inherit the obligation to be effective stewards of inherited wealth.
Topics
Transcript
Welcome to Goldman Sachs Exchanges. I'm Alison Nathan. Here's the number that surprised me when I first read it. Companies where a family still holds a significant stake produce 70% of the world's economic output and 60% of its jobs. But only 3 in 10 reach a second generation, and only about 1 in 10 reaches a third. So why is that? To help me work through that, I'm joined by two people who see opposite ends of this. FX de Malman is chairman of Goldman Sachs EMEA and chairman of Investment Banking. He also leads the firm's coverage of large family-owned companies and family offices, which means he's on the corporate side of the table, the capital raises, the…
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