Succession Challenges Loom Large For Family Businesses, As India’s $1.5 Trillion Wealth Transfer Underway

Mumbai: India is on the cusp of an unprecedented intergenerational wealth transfer, with an estimated USD 1.5 trillion expected to change hands over the next decade, a report released by EY–Julius Baer revealed. 

This significant shift is being driven by a wave of liquidity events, including business listings, mergers, and private equity-led exits, as more founder-led businesses mature and unlock value.

“The approach to succession planning is evolving in India. For example, business succession in India often faces obstacles such as limited communication, intra-family conflicts, and reluctance from senior generations to delegate authority, which can hinder smooth transfer of leadership.

“However, with the significant growth of family offices in India, there is much greater awareness of the need to implement a gradual succession plan rather than to leave everything to will. The need for a clear handover path during this transition is especially urgent in India, the authentic report said.

A great transformation is taking place in how Indians are managing and protecting as well as growing their capital. This is reflected in the number of family offices increasing from 45 to around 300 between 2018 and 2024. The increase coincides with the growing number of ultra-high net worth individuals, with surveys revealing that more than 13,000 families in India have wealth above USD 30 million.

This is a period of expansion for family offices but also a period of operations becoming increasingly intricate as the scope of responsibilities becomes wider, going beyond wealth preservation and succession planning to governance, strategic diversification and venture growth.

Succession planning, the report said, is a crucial and sensitive part of family office management. It is primarily divided into ‘business succession’, which requires a balance between preserving the founder’s legacy and embracing the next generation’s vision, and ‘wealth succession’, which involves personal assets. A successful transition thoughtfully transfers control and trust, empowering new leadership while staying true to family values.

Growth assets are a clear priority, with many family offices allocating significantly to them. Private equity and venture capital are also widely favored, with many allocating up to 10 percent of their portfolios, and a quarter going beyond 20 percent.

Family offices are evaluating legal structures that are tax-efficient from both the Indian and global perspectives as businesses expand globally. These structures need to be cost-efficient and flexible, considering changes in family dynamics that can occur due to birth, death, or changes in residency, and also regulatory changes, the report said.

“Succession strategies are becoming more nuanced, and the complexity of investing is driving greater demand for professional advice and tailored structures. Cross-border allocations are on the rise, supported by digital platforms and global networks,” the report added.