Summary of this article
Only 36 per cent of Indian families have documented succession plans.
Leaders over fifty generally maintain organized paperwork for successions.
Third generation heirs actively return to direct daily company operations.
India’s businesses are edging towards a major wealth transfer from one generation to the next. However, a recent report showed that India might not be completely prepared for the transfer and might not have undertaken the succession planning due for such a transfer.
According to the "Custodians of Change" report by Grant Thornton Bharat and Entrust Family Office, 42 per cent of Indian family enterprises have agreed on a succession strategy in principle but have not put it in writing.
The study tracked wealth custodians managing between Rs 100 crore and Rs 10,000 crore. It found that only 36 per cent of families actually have a documented succession plan in place. Another 16 per cent are still talking without a clear direction, and 6 per cent do not view the handover as a priority right now, according to the report.
The Hesitation to Formalise
The report also identified age as a key factor for delaying succession planning. Leaders over 50 generally have their paperwork in order, while those in their 40s are still trying to get family members on the same page before putting pen to paper.
It is human to delay the decision, as letting go of control also brings up psychological hurdles for founders trying to preserve their entrepreneurial culture. However, Partner and Family Office Leader at Grant Thornton Bharat, Pallavi Joshi Bakhru, mentioned in the report that a smooth transition is never an overnight event.
"Successful succession begins long before leadership or ownership changes hands. It requires families to build alignment, prepare the next generation, clarify ownership, roles, and decision-making, and establish a framework to support continuity across generations," Bakhru said.
The Third-Generation Comeback
The findings also showed that the stereotype around ancestral wealth diluting the drive for growth is being successively disproven. According to the report, while second-generation heirs often step back from daily operations, the third-generation dives right back in.
Currently, 54 per cent of third-generation family members hold real influence or co-lead decisions, according to the report. Looking four to five years out, 46 per cent of third-generation leaders expect to actively run the company, whereas only 18 per cent of the second generation want those operational roles, preferring board seats instead.
From Preservation to Purpose
The report also showed that protecting the family chest remains the top concern for 78 per cent of custodians, according to the report. But they are not just sitting on cash. Nearly 46 per cent are actively looking to diversify their revenue streams beyond the original family business. This indicates that modern wealth managers have to think bigger than simply keeping the money safe for future generations.
Redistributing Power
The era of the lone patriarch making all the calls is fading. The report shows governance models shifting generation by generation. Founders prefer a family-led setup with outside advice, the second generation wants professional management overseen by the family, and the third generation looks for a hybrid of the two.
Global and Calculated Growth
On the investment front, 56 per cent of families were found to chase long-term compounding over quick wins, according to the report. They are also looking outward, parking 44 per cent of their international allocations in global public equities, private markets, and listed funds.
These moves are heavily calculated. Indian families still want a say in where their money goes, as Pallavi Joshi Bakhru pointed out.
"For families, risk is rarely just a number. It is shaped by conviction, values, reputation and, importantly, how much influence they can have over the outcome," Bakhru said.
