Generational gamble: Why Bangladesh’s family businesses often fail after the founders
Only 31% of local family businesses have an informal succession plan, and not a single one surveyed had a robust, formalised, and communicated plan in place, compared to 15% globally
Highlights:
- Family businesses drive Bangladesh's economy but rarely survive past the founding generation
- 91% want to pass control on, yet almost none have formal succession plans
- Only 31% have even informal plans, far below global standards
- Weak governance and family feuds threaten long-term survival
- Square and Ispahani credit professionalism for lasting success
- Experts urge corporatising and clear governance for sustainability
Family-owned enterprises form the backbone of Bangladesh's economy, yet a startling number fail to survive the transition from the founding generation to the next.
Despite their intent to keep businesses within the family, a critical lack of structured planning is putting decades of legacy and economic growth at risk.
Bite-Sized: Why Bangladesh's family businesses often fail after the founders
This urgent challenge took centre stage at a seminar titled "Where Family Values Meet Future Vision: Strategy for Sustainable Succession," hosted by the Metropolitan Chamber of Commerce and Industry (MCCI) on Tuesday.
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Business leaders and experts pointed to unclear succession plans, weak corporate governance, and internal family conflicts as the primary threats to longevity.
An "alarming" planning gap
The stakes are high. A PwC study reveals that while an overwhelming 91% of Bangladeshi family businesses intend to pass control to the next generation—far higher than the global average—very few have a concrete roadmap. This gap between intention and action was described as "alarming."
The 2019 PwC survey underscores the problem: only 31% of local family businesses have an informal succession plan, and not a single one surveyed had a robust, formalised, and communicated plan in place, compared to 15% globally.
The seminar featured a presentation by representatives from Rajah & Tann Singapore, a Singapore-based legal advisory firm. They outlined strategies for ensuring that family businesses continue to thrive after passing on to successive generations.
The presentation emphasised the importance of corporatising family businesses. Key recommendations included ensuring sustainability over generations, institutionalising family governance structures, and separating family and business operations.
Why structured succession matters for stakeholders
Speaking at the seminar, leaders of Bangladesh's rare multi-generational success stories highlighted professionalism and clear governance as their key to survival.
Tapan Chowdhury, managing director of Square Pharmaceuticals Ltd, said that Square Group, founded by his father Samson H Chowdhury, continues to operate successfully and with a strong reputation even after passing on to the next generation.
He attributed this largely to professionalism and the development of a corporate culture within the organisation.
He said, "Today, we can proudly say that our corporation is truly run by professionals. We work as a team and recognise their contributions."
"Of course, my son or daughter may be major shareholders or enjoy the benefits of the company, but that doesn't mean they have the capability, the right experience, or the education to run it," Tapan added.
Mirza Salman Ispahani, chairman of MM Ispahani Ltd, also known as The Ispahani Group, one of Bangladesh's oldest conglomerates, explained how the business was established in Bangladesh through his ancestors, travelling from Iran via Mumbai and Kolkata.
He also highlighted how the group continues to operate successfully and maintain its reputation today. Currently, the group has businesses not only in tea, agro, food, and textiles but also in several other sectors.
Emphasising the importance of corporate culture in family businesses, he said, "The next generation should know what will come next or not come."
Salman said, "Not everyone is equal in a family. Everyone thinks their son or daughter is the best or the smartest, but that may not be true. So they get their share or dividend, but that doesn't mean they lead the business."
"If you fail to prepare for succession, that means you are preparing to fail. You really have to plan your succession properly. Governance means that once you have shares, sole proprietorships or partnerships become corporations, and the shares are automatically diluted," he added.
Kamran T Rahman, president of MCCI, who presided over the seminar, said: "Succession planning is often postponed, sometimes avoided, and too frequently misunderstood.
"In many cases, the absence of a clear strategy leads to disruption, fragmentation, or even the dissolution of businesses that took decades to build."
He added, "Structured succession planning allows families to align their values with long-term goals, identify and nurture future leaders, and ensure continuity in governance and culture. It also provides clarity to stakeholders, confidence to investors, and stability to employees."
Family feuds weaken once-strong businesses
The consequences of poor planning were presented in stark relief. The audience heard how once-powerful businesses have been locked in debilitating family conflicts and legal battles for nearly a decade.
Participating in Tuesday's discussion, Rahimafrooz Bangladesh Ltd Chairman Feroz Rahim said that they have a family constitution and council to run their business. He said they also faced some issues, but they are trying to solve them.
Also present at the seminar was MA Rahim Feroz, vice chairman of DBL Group, one of the country's leading family-run businesses.
Speaking to TBS after the event, he said, "Across the world, more than 80% of major businesses are owned by families. In countries like India, Sri Lanka, and Indonesia, businesses are successfully run by third and even fourth generations.
"But in Bangladesh, with the exception of only a handful of families, such sustainability is rare."
"The main reason is the lack of proper guidelines and family corporate governance," he said, adding that just as a country runs on a constitution, family businesses also need constitutions to guide successors after the transition.
"While this practice exists in many countries, it is largely absent in ours," he said.
Highlighting the limitations in drafting such constitutions in Bangladesh, MA Rahim Feroz explained, "If you ask a lawyer, they might simply copy a successful US model from Google. But the culture in Europe or America is not the same as in Bangladesh."
He stressed that the failure to set such a constitution is at the root of most family business disputes. However, he believes that if second- and third-generation family businesses in Bangladesh can start succeeding, this trend will gradually change.
To avoid such challenges in the future, DBL Group is already taking guidance from the International Finance Corporation (IFC) Family Business Governance, MA Rahim Feroz added.
The IFC Family Business Governance is a set of principles, tools, and practices developed to help family-owned businesses improve their governance, sustainability, and long-term competitiveness.
Very few family businesses have a clear succession plan: PwC study
In its first Family Business Survey in Bangladesh, global professional services firm PwC finds that only 31% of family businesses in Bangladesh have an informal plan in place, compared to 34% globally. No family businesses surveyed in Bangladesh have a robust, formalised and communicated succession plan in place (15% global), states the survey done in 2019.
Around 44% of the family firms surveyed say they have no succession plan, the same as the global average, while 25% do not know if such a plan exists or not, which indicates a need for dialogue within the family.
In another report titled "Family, legacy and you: Perspectives on succession planning and business continuity", PwC highlights why family-owned firms need to have documented and formalised succession plans to keep the family legacy and the business continuing for generations.
Of 100 businesses established, 60 run through the second generation, 32 until the third generation and hardly 16 survive up to the fourth generation, the PwC survey says, stating that succession planning is instrumental for ensuring business continuity.
In most cases, the second generation is mostly running the family businesses in Bangladesh. But succession planning is something that has largely been neglected in these family businesses, it points out.
