Across Europe, the heartbeat of local economies is family run businesses. These family businesses form the foundation of Europe’s economic and social fabric, accounting for between 60% and 80% of all enterprises and contributing nearly half of the continent’s private sector jobs and GDP, according to the 2022 European Family Business Barometer by BNP Paribas and SDA Bocconi. But this quiet strength is under threat. A crisis of succession and leadership development is emerging, one that many family businesses are still not prepared to confront. Unless a new generation of leaders is trained—supported by strong governance and a forward-thinking strategy—thousands of these enterprises risk fading from the economy within a generation.

This challenge is not confined to large countries or economic powerhouses—it is just as urgent in Malta, where family businesses form the overwhelming majority of enterprises and serve as the backbone of the national economy. The Maltese experience mirrors the broader European one: aging founders, unprepared successors and a lack of robust succession planning structures threaten to unravel decades of intergenerational effort. Despite targeted policy support in recent years, many Maltese family businesses still fail to prioritise all this and grab the opportunities in front of them, resulting in a lack of formal governance needed to navigate the transition from one generation to the next.

The statistics are telling. In PwC’s 2023 UK Family Business Survey, only 30% of respondents had a documented and communicated succession plan. A troubling 23% cited family relationships as a core business challenge, and nearly 1 in 5 had already faced conflict over succession. Without a clear path forward, even the most harmonious families can find themselves at odds when the time for leadership transition comes.

Yet succession is not simply a matter of passing on ownership—it is about building leadership capacity, underpinned by the structures that ensure clarity, accountability, and alignment. Succession planning cannot exist in a vacuum. It must be grounded in proper corporate governance: with the right forums for discussion, clearly defined family and business policies, and a strategic vision for the future. Without this solid foundation, even the most well-meaning transition plan becomes unstable, vulnerable to disruption or dispute.

Because make no mistake: leadership is not inherited. It must be taught, mentored and earned. Passing down a share certificate or the keys to the family firm does not mean the next generation is ready to steer it through digital disruption, shifting consumer preferences or labour market challenges. Yet research suggests that most family businesses are not preparing adequately.

And while many business owners recognise the need to bring in the next generation, far fewer are actively preparing them to lead. According to Mastercard’s Striving to Thrive report (2023), just 37% of SME owners across Europe—and the numbers are likely similar in Malta—feel prepared for the demands of a digital economy. Many haven’t yet identified which tools, systems, or skills the next generation needs to take the business forward. That’s not a technology problem—it’s a leadership & strategy problem.

The good news is that a growing number of family firms are taking deliberate action. They are creating shadow boards and mentoring systems, involving younger family members in governance, and introducing external coaches to support both generations. Others are formalising family constitutions, clarifying decision rights, and developing long-term strategic plans that go beyond the “leader’s” intuition. Research from INSEAD’s Wendel Centre for Family Enterprise (2021–22) highlights how these structured approaches lead to resilience. It allows family businesses to act decisively—and with long-term commitment rooted in clear governance and empowered leadership.

Still, succession planning is only half the story. Today’s leaders—those who built and protected the business over decades—also need support. Many are exhausted, emotionally tied to the company, and uncertain about how to step aside without losing purpose or control. Without advisory structures or a trusted governance framework, their transitions often become delayed, reactive or conflict-ridden.

Research by Escaramís and Arbussà (2025) confirms this dynamic. They show that businesses that move away from informal, personality-driven leadership toward institutionalised governance and strategic clarity consistently outperform those that don’t. It’s not about replacing the founder’s instinct—it’s about ensuring that their legacy is sustainable, even without them at the helm.

The takeaway is clear: succession is not an event—it’s a process. And that process must begin early, be built on proper governance, and involve the full scope of the family and the business. Across Europe—and in Malta especially—this is a moment of reckoning for family firms. The decisions made now will define whether these enterprises remain forces of local strength or become stories of missed opportunity.

Family businesses are uniquely positioned to offer a different kind of capitalism—one rooted in long-term thinking, social ties and stewardship. But legacy does not pass itself on. It must be cultivated, protected, and prepared. Leadership cannot be assumed. It must be built.

It is for this reason that we at EMCS Academy have put together the only accredited course for family businesses in Malta – The Award in Leading a Family Business offered by EMCS Academy is a timely and vital initiative that directly addresses the challenges outlined above. Designed specifically for the unique dynamics of family-run enterprises, this course equips both current leaders and next-generation successors with the tools, frameworks, and strategic insight necessary to ensure long-term business continuity. By focusing on leadership development, corporate governance, intergenerational communication, and future-proofing strategies, the programme lays the essential foundation for effective succession planning. In a European and Maltese context where many family businesses lack formal structures and clear transition plans, this course fills a critical gap—empowering families not just to manage their legacy, but to lead it with purpose, clarity and resilience. Click HERE to register your interest to be part of the next cohort that will kick off after summer 2025.