Few business decisions influence a company’s structure and future vision as profoundly as the succession of a founder or shareholder from the CEO position. Succession is often laden with tradition, expectations, and dynamics that echo throughout the organization. Effective succession planning requires a careful balance between honoring the past and strategically steering toward the future.
The succession of a founder or shareholder CEO goes beyond leadership renewal—it is about ensuring continuity, sustainable growth, and legacy. A well-structured and carefully planned process strengthens company stability, culture, and ability to respond to future business challenges.
Egon Zehnder conducted an analysis of major Brazilian companies that underwent the succession of a shareholder CEO. The study, conducted between May and July 2024, uncovered valuable lessons for navigating this critical transformation. And while our analysis primarily focused on founder and shareholder CEOs, the insights we found are applicable to CEOs in general.
However, a note of caution: our findings revealed some common characteristics and key elements, but there is no “silver bullet.” Successful transitions depend largely on the specific context of the company—both internally and externally.
Adaptation is Essential
Internally, it is crucial that shareholders are confident in the succession process, align with other stakeholders if necessary, and have potential successors identified and ready. Externally, factors such as the macroeconomic environment, political climate, competition, and regulatory changes must also be taken into account. In some companies, there was an immediate transition to a new CEO, whereas in others, the transition was more gradual, including a phased approach to allow the shareholder to step back from daily operations while preparing a long-term successor.
As one participant noted, “The shareholder was determined to proceed with succession but was neither prepared nor was the process adequately planned, which made the process more challenging.” In contrast, in the case of Localiza, as we will examine further down, then-CEO Eugênio Mattar viewed the succession as his most important mission from day one as CEO, seeing it as a chance to build a legacy for the company.
The shareholder was determined to proceed with succession but was neither prepared nor was the process adequately planned, which made the process more challenging.
Invest in Emotional Preparation and Long-Term Vision
Emotional preparation and full commitment to succession planning are crucial for shareholder or founder CEOs to establish a solid foundation for their successors. Failing to do so risks undermining the entire process. While the shareholder often facilitates dialogue among key stakeholders—including investors, the board, and executives—this role should also be shared with figures like the board chair.
“I was committed to finding someone better than me to succeed me; I set a high bar,” shared one interviewee. Structured discussions with the board are essential to define the ideal profile for the new CEO, considering the organization’s future needs, which may differ from the qualities of the founder or previous leader. This includes not only technical skills but also alignment with company culture, values, and emotional traits. Shareholders in the study also emphasized integrity as a non-negotiable trait for any potential successor.
I was committed to finding someone better than me to succeed me; I set a high bar.
In the most successful examples, stakeholders made an effort to build relationships based on trust, alignment, and mutual understanding between the shareholder and successor. In some cases, this even led to personal relationships, with time spent with each other’s families.
Moreover, companies should aim for internal succession, as it minimizes adaptation risks and reduces the time needed for the new leader to build rapport with stakeholders. “What made the difference in our succession process was, without a doubt, having a pool of distinguished and well-prepared internal talent,” noted one shareholder. However, mapping external talent is still a good practice for situations where internal candidates might not meet the needed requirements. Engaging external experts and ensuring potential successors receive comprehensive training are key strategies. Training might involve skill development, mentorship from the shareholder, and even psychological support. Ideally, future leaders should gain experience in the company’s most critical areas before assuming the CEO role.
Preparation is Key in Sustaining the Succession Planning Process
Most companies in the study established a multi-year succession planning process, with varying degrees of structure and detail. In all cases, companies made prior adjustments to support the transition, including:
In the analyzed companies, the potential successor was informed about the process anywhere from several months to five years in advance. “I was informed that I would be the successor two years before the transition, which allowed me to prepare both technically and emotionally,” said one CEO. This underscores the importance of defining an appropriate timeframe for planning and executing the transition.
Prior communication helped bring the successor into day-to-day operations. In some cases, other executives were also informed of the succession plan, especially those whose roles were transitioning as well. Communication to the market and the company usually occurred just a few months before the transition.
However, in times of market upheaval, economic crises, or other external threats, it may be necessary to delay the transition until conditions are more stable. One shareholder shared, “I had defined my transition and communicated it to my successor, but then the pandemic hit, and I had to change plans. It was the best decision I made—it would have put too much pressure on him.”
Courage to Build a New Path for the Future
The period following succession can be sensitive for shareholders or founders, involving fears about changes in power dynamics, loss of control, and even doubts about their own path forward. “The shareholder’s agenda and their influence over operations change overnight; I had to learn to deal with that,” said one participant.
Emotional readiness is key to navigating this period successfully. In most studied cases, governance structures were adjusted before the transition, with shareholders stepping back from daily operations to give the successor autonomy, space, and legitimacy.
Shareholders must be ready to break with past practices and decisions, enabling new leadership to emerge. Post-transition, interaction between the shareholder and new CEO often starts intensely but gradually tapers off over time.
A structured and well-planned process ensures continuity, preserves culture, mitigates risks, aligns leadership with strategy, and retains talent. Investing in careful planning is not just best practice but a strategic necessity for future success. As one interviewee said, “What brought the company here is not what will take it to the future—the leader’s profile must evolve.”
Seven Lessons for Effective CEO Succession Planning
1. There is no one-size-fits-all approach—the best model is tailored to the company’s context.
2. Conviction, commitment, and planning by the shareholder are essential for successful succession.
3. The new CEO’s profile should align with future challenges, not replicate the shareholder’s qualities.
4. Have a solid “Plan A” and “Plan B,” but also prepare “Plan C” options.
5. Prepare the company to welcome the new CEO.
6. Timing is crucial.
7. Do not overlook the emotional transition for the shareholder and define their role clearly post-succession.
Case Study
Fuel for the Future: The Succession Process of Eugênio Mattar, Former CEO and Current Chairman of Localiza
When Eugênio Mattar took the helm as CEO of Localiza, he made succession planning a top priority, viewing it as vital for the company’s long-term success. From the very beginning, he saw his succession as one of his key legacies. Now serving as Chairman of the Board, Mattar led a proactive succession process, starting preparations at least five years before the transition.
“I wrote the succession plan with support from the Board and the potential successor, structuring it in phases and stages, while focusing on critical processes,” he explains. To cultivate a pool of talented successors for the entire board, which was nearing retirement, Mattar recruited executives from the outside to develop within the company. His goal was clear: “I was committed to finding executives who could drive the company’s growth while creating value and who had the necessary skills to shape Localiza’s future.” He sought high-performing leaders who could help refresh Localiza’s culture, working alongside employees, the board, and the founders.
Mattar’s commitment and involvement from the start were crucial to the success of the process. He ensured open communication with the Board and shareholders throughout to align on key decisions. “I played a facilitator role in the succession process and maintained constant dialogue with all involved parties. The alignment of shareholders and the Board was vital to ensure the success of this process,” he notes.
In selecting his successor, Mattar took a holistic approach, considering competencies, management style, potential, and personality traits. This involved a broad restructuring of the company as well. “I prepared the organization for my successor by changing the structure, governance, culture, leadership profile, and even the dress code policy,” he says. The successor, who had been brought in years prior to the transition, also led many of these changes to actively shape the company for the future.
Part of the toolkit to supporting the succession plan included a partnership program to create future reference shareholders. Mattar was also mindful of building the successor’s reputation and legitimacy both within and outside the company. “Symbolism in this process is important. We recorded a symbolic video of me handing over the key to the Beetle, the first car in the company’s fleet, to the new CEO.” Beyond business preparations, Mattar involved the successor and his family in the shareholder’s own family circle. “I thought it was important to increase our level of intimacy and get to know him more deeply,” he adds.
The transition was smooth and well-communicated, as the successor’s readiness was evident long before the official change. After passing the CEO role to Bruno Lazansky in 2021, Mattar stepped away from day-to-day executive duties but remained available, holding monthly update meetings with the new CEO in an advisory capacity.
Succession planning is an essential part of a CEO’s role, whether they are a shareholder or a professional executive. Eugênio Mattar’s story illustrates how intentional succession planning can serve as an inspiring model, especially for shareholder CEOs seeking to ensure the continuity of their legacy.
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