The cost of having an ill-prepared successor  (2025)

(Last of two parts)

A well-governed family business is not built on wealth alone. It is built on structure, stewardship and shared values.

Too many founders believe that success is measured solely in revenue, assets and market share. But history has proven that without governance and leadership preparedness, even the most powerful business empires can crumble in just one generation.

The City Developments Ltd. (CDL) case is a stark reminder of what happens when a successor is not properly groomed. A name alone does not make a leader. A true successor must be more than just an heir; they must be a steward, a guardian of the family’s legacy and a responsible decision-maker.

For family businesses to endure, they must prioritize these critical elements:

A clearly enforced governance structure

A family constitution and an ownership agreement are not just symbolic documents to be signed and shelved. They must be binding, actively followed and enforced with discipline. Without governance mechanisms in place, succession planning is nothing more than wishful thinking.

In my mentoring work across Asia, I have seen many founders draft governance agreements only to ignore them when the time comes to enforce them. They believe their leadership will last forever, that their word alone is enough to prevent conflicts. But the moment they step back or pass away, power struggles emerge, and the business spirals into chaos.

A governance framework is only as strong as its execution. When ignored, it becomes a ticking time bomb.

Stewardship over ownership

The next leader must embrace responsibility, not entitlement. There is a fundamental difference between heirs who believe they own the business and those who understand they serve it.

Ownership is a privilege. Stewardship is a duty.

READ: The cost of having an ill-prepared successor (First of two parts)

In the CDL debacle, we saw what happens when leadership is assumed as an entitlement rather than a responsibility. Sherman Kwek may have inherited his father’s name, but he failed to inherit the wisdom required to lead effectively. His financial misjudgments and governance decisions alienated key stakeholders, eroding trust in his leadership.

A true successor must recognize that their primary role is to preserve and grow the business for future generations, not just to enjoy its financial rewards. Without this mindset, a family business is doomed to fail.

Regular mentoring and alignment meetings

A successor must not only learn business strategy but also internalize values, purpose and governance. Mentoring is not a one-time event. It is a continuous process.

I recall mentoring an heir from a large Asian conglomerate whose father had always controlled every aspect of the business. Governance agreements existed, but they were merely documents—never discussed, never reinforced. When the patriarch passed, the next generation was left in confusion.

The heir admitted to me, “I know how to read financial reports, but I don’t know how to unite my family.”

Without regular alignment sessions, succession becomes a transaction, not a transformation. It is not just about passing down shares; it is about passing down values, principles and a shared vision for the future.

The true test of leadership

I have seen too many business empires fall apart because founders prioritize financial expansion over leadership development. If wealth is the only language spoken in the family, then conflict is inevitable.

Founders must ask themselves:

• Have I truly prepared my successor to lead with wisdom and responsibility?
• Have I ensured that governance structures are not just written but enforced?
• Have I instilled stewardship, not just ownership, in the next generation?

Because at the end of the day, the greatest legacy a founder can leave is not just an empire—it is a capable successor who leads with integrity.

A business without a capable steward is destined to fail. —CONTRIBUTED

The author is professor, a book author and a family governance advisor at Family in Business Strategic Consulting.