Succession in South African family businesses stalls on ownership before leadership, and B-BBEE adds strain
Introduction
Family firms carry a lot of weight in the South African economy, yet the research on them is oddly thin. Viviers and Venter (2025) could find only close to 80 family businesses that had been listed on the Johannesburg Stock Exchange since 2000, and many of those have since delisted. Most of the succession work that does exist comes from small-firm surveys, one of Gauteng businesses and one of Indian-owned firms (Khosa, 2024; Mahomed and Mtembu, 2021), which is useful but hardly the whole picture. So anyone writing about this subject has to be careful about how far the evidence actually stretches.
This paper argues that succession in South African family businesses goes wrong mainly because ownership is left undefined, and only secondarily because of any shortage of willing or capable heirs. Management succession gets most of the attention from owners and researchers alike (Khosa, 2024; Urban and Nonkwelo, 2022). Ownership succession, meaning who ends up holding the shares and on what paper, tends to be dealt with late, if at all (Adekomaya and Schachtebeck, 2025). Family conflict, pay and the Broad-Based Black Economic Empowerment (B-BBEE) framework are best read as pressures that land on that unsettled ownership question. The paper looks first at management succession, then at ownership and conflict, then at compensation, and then at B-BBEE, before pulling the threads together.
The planning gap in management succession
The basic finding across the small-firm studies is that owners know succession matters and still do not get round to it. Khosa (2024) surveyed owners, founders and managers of small family firms in Gauteng and received 257 usable questionnaires out of 384 sampled. The respondents appeared to accept the value of planning but did not treat it as urgent, and many seemed to equate planning with picking a successor. The reasons given for having nothing in writing were fairly ordinary: the owner had never thought about it, family members showed no interest, the business was still small, or the children were too young. Mahomed and Mtembu (2021) found something similar among Indian-owned family firms, where 86.27 per cent of respondents said the business was not fully ready for the owner’s exit. Their percentages seem to rest on about 51 respondents rather than the 60 the paper reports, so the figure is better read as a rough indication than as a precise measure.
What happens when there is no plan is described more vividly in the qualitative work. Adekomaya and Schachtebeck (2025) interviewed 30 owners, managers and supervisors and reported that firms without structured succession plans tended to face reactive, crisis-driven transitions and operational strain. The same study linked inclusive practices, such as involving non-family employees, to better morale and resilience during a handover. That is a modest claim, and the authors themselves avoid causal language, but it does fit with what Urban and Nonkwelo (2022) found when they looked at daughters as possible successors. Their survey pointed to business context, family cohesion, adaptability and the parent-daughter relationship as the factors that mattered, and a harmonious business environment made it easier to accommodate a daughter in the role.
Gender is where stated attitudes and observed practice seem to come apart. In the Indian family business survey, 84.31 per cent said a female family member could be a successor (Mahomed and Mtembu, 2021). Yet among the JSE-listed family firms studied by dos Santos et al. (2024), only five of the 70 directors who represented founding families were women. Viviers and Venter (2025) make the same observation about management, noting that very few women have been involved in running these businesses, although daughters have succeeded their fathers at a handful of firms such as Italtile. The samples are completely different, so I would not push this comparison too hard. Still, it suggests that openness in principle does not do much by itself when it comes to who actually ends up in the chair.
Professionalisation is happening in the larger firms, and for reasons that have little to do with family choice. By 2022, 29.17 per cent of the sampled listed family firms had a family member as board chair and 16.67 per cent had a family CEO, and all but one had split the two roles (dos Santos et al., 2024). Viviers and Venter (2025) report that compliance with the King codes appears to have reduced family influence at board level. So the picture is of governance rules, rather than succession planning in its own right, pushing family members out of the top posts. For small firms that never face a King code, nothing comparable exists, which is probably why the planning gap in Khosa’s (2024) sample looks so persistent.
Ownership succession and the origins of family conflict
Ownership is where the damage tends to show up. Adekomaya and Schachtebeck (2025) report participants describing unclear ownership and legal arrangements as sources of tension, uncertainty and conflict during succession. One family had run a business for decades without written records, and when the founder fell ill there was no will, so nobody knew who should lead. Another had registered the business but never updated the ownership papers after a parent died, and the family could no longer tell who held which shares. A third was setting up a trust very late and wished it had moved sooner. These are anecdotes from a purposive sample and the authors say the findings cannot be generalised. Even so, the pattern is hard to miss: the disputes start with paperwork nobody did, and the personalities come in afterwards, which matches the link Adekomaya (2025) draws between weak formal planning and unresolved tension.
A literature-based paper by Adekomaya (2025) comes at the same problem from the other direction. It suggests that succession in South African family firms is held back by weak formal planning, strong family expectations and unresolved personal tensions, with cultural values and patriarchal norms shaping how all this plays out. The recommendations are the familiar ones, namely structured governance, open communication and training for both generations. I find the diagnosis more convincing than the cure. Telling families to communicate better is advice that has probably been given at plenty of family business seminars, and it says nothing about what to do when a founder simply will not discuss the shares. Khosa’s (2024) respondents who had never considered a plan at all are the ordinary version of that founder (Khosa, 2024).
The survey evidence adds a wrinkle about what families actually want. Mahomed and Mtembu (2021) found that most respondents rated full family ownership as important and preferred a successor from the bloodline, though the paper reports two different figures for the ownership item (86.27 and 58.81 per cent), so I would treat the direction rather than the number as reliable. The same respondents were not rigid when no suitable relative existed: 58.82 per cent would consider a non-family leader and 41.18 per cent would sell. That implies many owners already separate management from ownership in their heads, even when they do not say so. If so, the real choice facing a founder is less about whether a child can run the firm and more about who is allowed to hold the equity, which is exactly what the unwritten records in the cases reported by Adekomaya and Schachtebeck (2025) left unclear.
Even in the listed sector, where formal governance is much stronger, family control seems to survive through quieter means. Many founding families used pyramid structures to keep control and resist takeovers, and most of these have been dismantled in response to governance codes (Viviers and Venter, 2025). Family members still held about 16 per cent of board seats on average across 2006 to 2022, and many directors classed as independent were relatives or had served for more than nine years (dos Santos et al., 2024). The authors’ own stricter reclassification brought average independence down from about 45 per cent to about 32 per cent. None of this means the families are doing anything improper, and dos Santos et al. (2024) take care to say that the benefits of family stewardship deserve weight. What it shows is that ownership influence tends to outlast the formal structures built to dilute it, which is basically the same ownership problem seen from the top end.
Pay inside the family firm
The evidence on compensation is the weakest part of this whole topic, and it is worth admitting that openly. None of the South African studies drawn on here report pay data for family and non-family staff. Dos Santos et al. (2024) touch on executive pay only in their theoretical discussion, noting the stewardship argument that carefully designed pay packages matter less when managers are trusted, and Viviers and Venter (2025) do not take up remuneration at all. The international literature at least offers a framework. Samara et al. (2021) challenge the usual assumption that family employees are paid more than non-family peers and that the resulting unfairness makes non-family staff withdraw effort. They argue instead that who benefits depends on the society: in collectivist settings the obligation to support relatives tends to favour family employees, while in individualist settings the family’s concern for its standing tends to favour outsiders.
Where South African family firms sit on that spectrum is an open empirical question, and the sources do not settle it. A firm in Soweto and a firm in Constantia may sit on very different sides of Samara et al.’s (2021) argument. That matters for succession because pay is one of the ways a family signals whether a successor’s position is earned or inherited. Adekomaya and Schachtebeck (2025) link inclusive practices towards non-family employees with better morale during transitions, and it would be surprising if pay had nothing to do with that. But the study does not test it, so I will not claim it.
There is also a gap on the outgoing generation. Mahomed and Mtembu (2021) report that 90.2 per cent of their respondents would want the departing owner to stay on in an advisory role. The survey does not ask how that person would be paid, whether through salary, dividends or a loan account against the shares. That is not a trivial detail. A founder who keeps drawing income from the business without holding clear title to it is exactly the sort of arrangement that, on the evidence from Adekomaya and Schachtebeck (2025), tends to end in confusion later. Compensation and ownership are, in other words, tangled together, and research that treats them separately will keep missing how succession disputes are actually built.
B-BBEE and the ownership question
The B-BBEE framework enters the family business story through the ownership scorecard. The Broad-Based Black Economic Empowerment Act 53 of 2003 provides the legal basis for codes of good practice (Republic of South Africa, 2003), and the amended codes of 2013 made ownership one of three priority elements alongside skills development and supplier development (Department of Trade and Industry, 2013). Smaller enterprises get a shortcut: those that are more than 51 per cent black-owned qualify as Level 2 contributors, and those that are fully black-owned qualify as Level 1. For a family firm, that attaches a scoring value to the ownership register. Who holds the shares, and whether a share ever passes to someone outside the family, is no longer only a family matter.
What we know about uptake among small firms is limited, and almost nothing is specific to family businesses. Kupzig (2025) used the 2020 World Bank Enterprise Survey and found that only about 49 per cent of the South African SMEs in the sample were B-BBEE certified. Older firms, those founded before 2003, tended to have lower certification levels, and a female owner was associated with a higher chance of being certified. The dataset has no information on whether a firm is family-owned or on the race of the owner, and the results are associations, not causes. So the study cannot tell us how family firms behave. Viviers and Venter (2025) go a step further by proposing that close family ties may increase resistance to B-BBEE, but they put it forward as a research question, not a finding.
The listed-company evidence is not family-specific either, but it speaks to the worry that owners often voice about empowerment and value. Dreyer et al. (2021) studied 379 JSE-listed companies from 2004 to 2015 and found no relationship between B-BBEE scores and accounting measures such as return on assets or return on equity. The total score was negatively related to the price-to-earnings ratio and positively related to the cost of equity, which the authors read as a sign of negative shareholder perception. The ownership and employment equity elements were each positively related to the cost of equity. So the fear of dilution has some basis in how investors price risk, though the data do not show that empowerment damages operating performance. That matches the point made by Viviers and Venter (2025) that earlier B-BBEE research has mostly covered SMEs and listed companies in general. A family weighing a share transaction should take the distinction seriously, because the cost may lie in perception rather than in the business.
Board composition offers one small piece of reassurance. The proportion of directors who were persons of colour rose over 2006 to 2022 in the listed family firms, with race classified using the B-BBEE Act, while family representation stayed at roughly the same level (dos Santos et al., 2024). That suggests boards diversified alongside family presence and not at its expense, at least on average. I would not read it as evidence that ownership has opened up, since board seats and shareholdings are quite different things. Viviers and Venter (2025) give no figures on black ownership among listed family businesses and note that their sample is dominated by families with Jewish or Afrikaans roots. The honest conclusion is that nobody has yet measured how empowerment transactions interact with generational transfer.
Roughly half of the SMEs in Kupzig’s (2025) sample were not certified at all, so for many family firms the question may not even have arisen yet. Even so, the logic of the framework points to a practical problem. A founding family that has never settled who owns what will find it hard to design an empowerment transaction, because a buyer or a funder will ask the same questions an heir would: whose shares, under which agreement, held by which entity. The unclear records that Adekomaya and Schachtebeck (2025) describe would make that exercise slow and contested. So B-BBEE does not create the ownership problem. It basically forces it into the open earlier than a family might like, and whether that is a burden or a prompt probably depends on whether the paperwork exists.
Conclusion
The evidence reviewed here supports a reasonably clear position, while leaving real gaps. Owners tend to recognise succession planning without acting on it (Khosa, 2024; Mahomed and Mtembu, 2021), and what gets planned is usually the choice of a successor rather than the transfer of ownership. The conflict that follows appears to grow out of unwritten wills, outdated share records and late trusts more than out of personality alone (Adekomaya and Schachtebeck, 2025; Adekomaya, 2025). Governance codes have loosened family control at the top of the listed sector, but family influence seems to persist through quieter routes (dos Santos et al., 2024; Viviers and Venter, 2025).
On pay and B-BBEE the honest verdict is more cautious. The compensation literature offers a useful framework (Samara et al., 2021) but nothing tested on South African family firms, and the B-BBEE studies describe certification and listed-firm outcomes without separating family from non-family ownership (Kupzig, 2025; Dreyer et al., 2021). The recommendation that follows is practical. A family should settle its ownership paperwork before it argues about who leads, because that is the work every other decision depends on, including any empowerment transaction. Researchers, for their part, could do the field a favour by recording family status and owner race in the datasets they already use. Until that happens, claims about how B-BBEE shapes family succession will remain informed guesses.
Reference list
Adekomaya, V. (2025) Family business succession planning and conflict in South Africa: a theoretical framework to guide future research and practice. International Journal of Research in Business and Social Science, 14(8), pp. 142-151. doi:https://doi.org/10.20525/ijrbs.v14i8.4328
Adekomaya, V.O. and Schachtebeck, C. (2025) Assessing the impact of succession planning on the sustainability of family enterprises: a case study in South African family businesses. Acta Commercii, 25(1), a1464. doi:https://doi.org/10.4102/ac.v25i1.1464
dos Santos, G., Viviers, S. and Venter, E. (2024) The composition of listed family firm boards in South Africa: alignment to best practices and governance codes. South African Journal of Business Management, 55(1), a4565. doi:https://doi.org/10.4102/sajbm.v55i1.4565
Dreyer, J.A., Viviers, S. and Mans-Kemp, N. (2021) Broad-Based Black Economic Empowerment and corporate financial health. South African Journal of Economic and Management Sciences, 24(1), a3652. doi:https://doi.org/10.4102/sajems.v24i1.3652
Khosa, R.M. (2024) Succession planning: perceptions of South African family-owned small enterprises. Journal of African Business, 25(4), pp. 767-791. doi:https://doi.org/10.1080/15228916.2023.2257558
Kupzig, N. (2025) SMEs and black economic empowerment in South Africa. Economics Bulletin, 45(3), pp. 1159-1169. Available at: https://accessecon.com/Pubs/EB/2025/Volume45/EB-25-V45-I3-P102.pdf (Accessed: 18 October 2026).
Mahomed, Y. and Mtembu, V. (2021) Business succession in Indian family businesses in South Africa. Journal of Economics and Behavioral Studies, 13(3), pp. 73-80. Available at: https://ojs.amhinternational.com/index.php/jebs/article/download/3182/2024/ (Accessed: 18 October 2026).
Samara, G., Jamali, D.R. and Parada, M.J. (2021) Antecedents and outcomes of bifurcated compensation in family firms: a multilevel view. Human Resource Management Review, 31(1), 100728. doi:https://doi.org/10.1016/j.hrmr.2019.100728
Urban, B. and Nonkwelo, R.P. (2022) Intra-family dynamics and succession planning in family businesses in South Africa: the daughter as a potential successor. Journal of Family Business Management, 12(2), pp. 266-279. doi:https://doi.org/10.1108/JFBM-08-2020-0084
Viviers, S. and Venter, E. (2025) Family businesses listed on the Johannesburg Stock Exchange: an introduction and research agenda. South African Journal of Economic and Management Sciences, 28(1), a6088. doi:https://doi.org/10.4102/sajems.v28i1.6088
Legislation and case law
Department of Trade and Industry (2013) The amended codes of good practice on B-BBEE 2013. Media statement by the Minister of Trade and Industry, 11 October 2013. Available at: https://www.gov.za/news/media-statements/amended-codes-good-practice-b-bbee-2013-11-oct-2013 (Accessed: 18 October 2026).
Republic of South Africa (2003) Broad-Based Black Economic Empowerment Act 53 of 2003. Government Gazette No. 26285, 21 April 2003. Available at: https://www.gov.za/node/697333 (Accessed: 18 October 2026).