Last month, when it was announced that the daughter of Inditex’s founder, Amancio Ortega, would be taking over as chair of the family’s business, it’s shares fell by more than 6 percent.

The high street fashion giant, which owns the brands like Zara, Mango and Massimo Dutti, appointed Marta Ortega to replace Pablo Isla, 57, who has chaired the company for more than a decade.

There has been growing speculation for some time that Isla was planning to move on. The former Executive Chair spearheaded Inditex’s expansion over his 17-year career at the company and increased its market value sixfold to $100 billion.

Alongside the rumours the last few years that Isla was making plans to move on, Marta Ortega was slowly gaining more public exposure for her role within the company. It seemed almost obvious that she would take over the day-to-day running one day.

Always some concerns

The fall in shares came despite the fact that Ortega is the natural fit for the business. She has worked within all functions of the business since she began working 15 years previously as an assistant to its brand Bershka.

Marta reassured stakeholders in a statement made after the announcement: “I have lived and breathed this company since my childhood, and I have learned from all the great professionals.”

“I have always said that I would dedicate my life to building upon my parents’ legacy, looking to the future but learning from the past,” she said.

Marta revealed she was deeply honoured the firm had placed trust in her to take up the position.

Investor anxiety is likely due to Ortega’s young age, and the fact she is replacing a leader who had been long established at the company – a way to have alleviated this would have built up a stronger relationship between Ortega and Inditex’s investors.

Communication is key

This tells us the importance of communicating the succession procession effectively – and the shear amount you have to do to get important stakeholders, from investors to employees, comfortable with a change of leadership in the family.

It is also a telling example of the immediate narrative that develops when a child takes over the business: despite countless evidence to the contrary in the case of Marta, people automatically assumed that her appointment had more to do with nepotism than genuine experience, capability, and leadership potential.

Next generation members in family businesses often have the kind of experience that those coming in from outside the company did not have – they have grown up alongside the business and seen how it weathered each storm it was presented with.

Similarly, next generation engagement from the early stages is crucial to a smooth transition once the succession event occurs. Familiarity from both sides – whether this is Ortega’s familiarity with the company, or the company employees’ familiarity with her – is necessary to ensure stakeholder confidence.

Ensuring that the incoming leaders will be able to sustain the success of the company, and even grow it beyond its current position, will be a determining factor in investor confidence, too.

Reputational recommendations:

• Get started earlier than you think. You will only ever benefit from starting early, especially when it comes to introducing next-generation leaders to important investors – familiarity is born out of time.

• Consider whether to communicate the succession decision years ahead of time. The case of Ortega shows that a shock announcement, no matter how much experience your successor has, may rattle investors. Giving them an indication of this upcoming event should reduce the shock impact.

• Put next-generation leaders on an investor roadshow. Give them an opportunity to meet shareholders on all sides of the business – this will strengthen trust in your successor’s abilities and genuine interest in the family business.