LBS warns poor succession threatens household corporations

The Lagos Enterprise School has warned that poorly managed management transition, not market competitors, stays the most important risk to the survival of family-owned companies in Nigeria.

In a press release, the Household Enterprise Initiative referred to as for stronger governance buildings to make sure accountability with out weakening household cohesion.

Household-owned enterprises dominate Nigeria’s SME panorama and supply employment throughout sectors, however their long-term survival stays unsure, the varsity mentioned.

In line with the LBS, “In follow, the best risk to household enterprises is just not market competitors however poorly managed management transition.”

The varsity famous that many founders mistakenly imagine that sturdy enterprise efficiency ensures continuity, stressing that weak governance buildings typically undermine in any other case worthwhile companies.

It added, “International knowledge means that greater than 70 per cent of household companies fail to maneuver efficiently from the primary to the second technology, whereas fewer than 13 per cent survive into the third.”

LBS defined that the collapse of many household companies is just not because of poor viability however as a result of governance programs have been by no means designed to deal with succession, accountability, and clearly outlined roles.

Highlighting the complexity of household enterprises, the varsity mentioned such companies function throughout household, possession, and enterprise programs, which regularly create tensions when not correctly aligned.

The establishment said, “When these programs should not intentionally aligned, tensions emerge, choices gradual, and worth erodes.”

On governance, LBS dismissed the notion that it undermines founders’ authority, describing it as an alternative as a crucial software for sustaining worth throughout generations.

It mentioned, “Efficient governance buildings assist separate household relationships from enterprise roles, make clear determination rights, and create accountability with out weakening household cohesion.”

The varsity additionally recognized delayed succession planning as a serious weak spot amongst Nigerian household companies, attributing it to cultural reluctance to debate management transitions.

It confused that “longevity is just not secured by optimism or casual assurances,” urging founders to intentionally put together successors and set up clear management standards.

On sensible governance steps, LBS famous that many profitable Nigerian corporations started with casual advisory buildings earlier than transitioning into formal boards as they expanded.

Nevertheless, it warned that governance failures typically stem from loosely outlined roles for members of the family, reliance on verbal agreements, and undocumented expectations.

“These gaps might seem manageable throughout secure durations, however they develop into fault traces throughout progress, downturns, or management change,” the varsity added.

The establishment additional referred to as for professionalism amongst members of the family concerned in enterprise operations, insisting that competence and accountability should take priority over kinship.

Addressing transparency, LBS mentioned restricted monetary openness typically fuels disputes inside household companies, significantly round dividends and management.

It added that impartial non-executive administrators and exterior advisers are important to enhancing objectivity and aligning governance with long-term progress.

The varsity famous that governance buildings should evolve as companies transition from founder-led entities to multi-generational possession fashions.

It emphasised early motion, stating, “Governance ought to start early, not in disaster.”

LBS maintained that straightforward steps similar to structured household conferences, documented roles, and casual boards can considerably enhance enterprise continuity.

The varsity additionally introduced that stakeholders would collect on the Third IFBC 2026 Convention scheduled for 26 March 2026 on the Ecobank Pan-African Centre to debate the governance and sustainability of household companies throughout Africa.