Family business transition: What to consider

A business represents more than a financial asset. It can provide for your family and become an important part of your legacy. But turning that legacy into something lasting takes more than hard work and good intentions. It requires thoughtful planning, yet many business owners delay those conversations.

Less than half of businesses surveyed in Huntington Bank’s 2026 Beyond Business Report indicated they have a formal succession or exit plan in place, demonstrating that many owners continue to delay planning for ownership transitions¹. The earlier you begin planning, the more options you may have. Without a plan, you could be left with choices that do not reflect your goals or your family’s.

A thoughtful business succession strategy can help prepare the next generation, address potential challenges and preserve more options for the future. It starts with making time to create a plan that reflects your goals for the business and your family.

Don’t miss: Preparing for a family business succession conversation for best practices to have a productive discussion about the future of your business.

Consider your goals

A good place to begin is with the end in mind. What is the ideal outcome you hope to achieve?

Do you want to remain involved in the business? Are your preferred successors interested and prepared to lead? Is keeping the business in the family the right decision for the business and your family?

Understanding why you want to keep the business in the family can help guide the rest of the planning process. It can also help clarify how much value you may need from the business to support your next chapter and how the transition should unfold.

What are your family’s goals?

Family dynamics can be complicated. Some family members may work in the business while others do not, and extended family members may also have ties to the company. How do you balance fairness, compensation and expectations while helping to avoid future conflict?

Today, “family” can mean more than just parents and children. It’s important to define who should be included in planning discussions and to begin those conversations early. Clear communication can help reduce misunderstandings, align expectations and preserve important family relationships.

Finding the right successor

Whether it’s a family member, a long-time employee or someone from outside the company, identifying and preparing a successor is a critical part of the transition process. Ideally, leadership transition should occur gradually whenever possible.

If possible, involve a trusted senior employee to mentor the successor. They can offer valuable insights and help bridge the gap between generations. It may also help if the successor gains experience outside the family business or starts in a junior role within the company to build credibility with colleagues. Many successful business transitions occur when the next generation gains experience at another organization or within a complementary industry.

And if client and vendor relationships are critical to your business, make sure your successor has time to build their own connections with those key contacts.

Structuring the ownership transfer

There are several ways to transfer ownership, such as through a sale, a gift or a combination of both.

In a family sale, the buyer may use a loan, either third-party or seller-financed, and repay it using business income. If you’re gifting the business, you can do so during your lifetime or through your estate. Each option has different tax implications. A sale might be structured in installments to spread out capital gains tax obligations over time. Gifting during your lifetime may help reduce the size of your taxable estate, though the financial, tax and control implications should be evaluated carefully with your advisors.

Depending on your objectives, charitable giving strategies may also play a role in a broader business transition plan and align with your personal, family and philanthropic goals. Learn more about charitable planning approaches and how they may align with your goals.

Planning for your financial future

Your own financial future is a key part of business succession planning. How much liquidity will you need? What does your next chapter look like?

You’ll also want to think about your employees. Business transitions can create uncertainty, and long-term staff may consider other opportunities if communication and planning are lacking. Retention strategies such as employment agreements, deferred compensation arrangements or incentive programs may help support continuity during the transition. In many cases, the successful execution of a succession plan depends on the support, knowledge and continuity provided by long-time employees.

Start planning today

Starting early can provide more time to prepare future leaders, address family considerations and evaluate ownership transfer strategies. Even small steps can help move the process forward. The sooner you begin, the more options you may have to create a transition aligned with your goals for the business and your family.