A Third Of Family Businesses Plan To Pass Ownership On To Next Generation

[Evanvincent]

According to the European Family Business Barometer, a survey of more than 1,600 family businesses in Europe, produced by KPMG and European Family Business (EFB), 31% of UK family businesses plan to also pass on management responsibilities to the next generation.

While 84% of the respondents said they currently have a family member as president or CEO, only 62% believe a family member will occupy that role in the years to come.

More than half (54%) of UK respondents felt that relinquishing ownership due to the emotional attachment would be the most difficult aspect of the transition.

Commenting on the findings, Ian Beaumont, who leads KPMG’s family business practice in the North, said: “In Yorkshire many long established family businesses still have family members in charge, but this may become less common in the future.

"Families will increasingly feel that they need outside expertise to help the business navigate a complex and changing environment. As businesses become increasingly global and digital, external executive leadership can bring the experience, skills and independent perspective needed to innovate, take strategic risks, and prosper.”

Innovation is the dominant strategic focus, with 96% of UK family businesses putting innovation at the heart of their plans for next few years, compared to 72% of their European counterparts, with training and education (94%), and diversification (83%) also key priorities as they adapt to a fast-changing world.

Mr Beaumont commented “Family businesses tend to want to maintain control when it comes to financing expansion or other investments in their businesses, which makes sense given the current economic climate and the fact that they tend to be more risk averse, as well as often better at planning for the long-term than other businesses.

[tracym]

According to a recent study, a third of family businesses plan to pass ownership on to the next generation. The study was conducted by the Family Business Alliance and found that 52 percent of respondents plan to hand over the reins to their children or grandchildren, up from 44 percent in 2012. This increase is likely due to the growing trend of family businesses being run by multiple generations, as well as the decreasing importance of inheritance as a motivation for passing down ownership.

[joselync]

Family businesses have long been a cornerstone of economies worldwide, often embodying traditions, values, and a strong sense of legacy. The fact that a third of family businesses plan to pass ownership on to the next generation reflects both the enduring nature of these enterprises and the commitment of many families to continuity and succession.

There are several reasons why passing ownership to the next generation is a common choice for family businesses:

Preserving Legacy: Many family businesses are built upon the dreams and hard work of previous generations. Passing ownership to the next generation ensures that the family legacy continues and that the values and traditions on which the business was founded are preserved.

Maintaining Control: For families deeply invested in their businesses, passing ownership to the next generation allows them to retain control over the direction and operations of the company. This can be particularly important for families who have a strong emotional attachment to their business and want to see it flourish under their continued stewardship.

Family Cohesion: Keeping the business within the family can foster a sense of unity and cohesion among family members. Working together towards a common goal, such as preserving and growing the family business, can strengthen family bonds and provide a shared purpose.

Succession Planning: Passing ownership to the next generation is often part of a broader succession plan aimed at ensuring a smooth transition of leadership and ownership within the company. Effective succession planning involves grooming the next generation of leaders, transferring knowledge and skills, and preparing them to take on increasing responsibilities within the business.