We recently learned of the death of Lucio “Bong” Tan, Jr. At 53, and at the prime of his life, Tan Jr. collapsed during a basketball game. Naturally the family was devastated because it was only four months earlier that his billionaire father Lucio Tan with a net worth of close to $4 billion, initiated the succession process by appointing him as chief executive officer of the family’s flagship business, Philippine Airlines. “His untimely passing leaves a big void in our hearts and our group’s management team, which would be very hard to fill.” The Tan family said in a statement.

Prepare the Process Early

Succession planning is a difficult subject to face. Such discussions often trigger a range of deep emotions, among them fear, conscious acknowledgment of personal aging and death, loss of personal identity defined by involvement in the business and a desire to avoid family conflict. Despite prodding by the next generation, these factors contribute to the company leadership’s lack of will to address succession planning on a timely basis. But you can never set aside succession. Business-owning families must realize that it is too daunting to imagine a likely scenario where their founder or patriarch dies without planning and leaving the future of the enterprise hanging by the thread.

In a recent family business forum in Singapore where I regularly meet high net worth (HNW) individuals to plot their vision for the future, the specter of death of a business leader remains a hot topic among owners and senior executives. In most cases, owners are dumbfounded and shock when I present cases where an unexpected death of a key business leader happens. I also remind them that a transition will take place, whether planned or unplanned. And this can be caused by death, disability, health challenges, family disputes, and other life events. Unplanned transitions generally are marked by problems that often prove devastating to the business, family relationships and ultimately to the family wealth.

During any unplanned generational transitions, many family businesses are sold or dramatically go into a tailspin. In some cases, surviving family members who lack the experience struggle to navigate the business, and end up with a declining performance. Even when succession plans are developed, they often fail to deal with the many quantitative and qualitative issues necessary to properly transition a family enterprise to the next generation.

Planning Early 

These families are not alone. In a Wong + Bernstein Advisory internal research, fewer than 30 percent of business owners have a succession plan in Asia! Without adequate governance, you don’t have stability. Without stability, you lose your competitive advantage. Founders, second generation leaders, patriarchs or matriarchs always think of themselves as superheroes and take the certainty of death lightly until one day he or she discovers something that will forever change his or her perspective about life and living.  And then in a blink of an eye, the mortal faces death and reflects on the family and the family business and the “what ifs” and the “what should have been done.”

In all likelihood, it will be too late. Thus, it is no surprise that the Chinese saying,
“Wealth shall not last three generations” will continue to consume and haunt families in the event that death suddenly occurs in the family. You can prevent losing all that you worked so hard with a good and enforceable transition plan. A well-thought-out succession plan provides an essential advantage to those families seriously concerned about continuing family enterprise ownership and success into the next generation. Indeed, the family business system must be governed well in order to succeed. And the first major step is preparation!/WDJ