Succession planning is a key issue for many family- and privately-owned businesses who are focused on building, retaining and passing on their wealth to the next generation, and leaving a lasting legacy. It involves recognizing and coming to grips with many complex family, individual and business issues that must be addressed in the evolution process.
Baker Tilly International in co-operation with Baker Tilly Pitcher Partners and Swinburne University has taken a closer look to both the sociological and economic implications for the family business succession process. Launched on 2 December 2013, the results from 1,650 business owners across 55 countries provides businesses with a common sense, practical guide on how you should view and conduct your succession process.
Geoff Barnes, CEO and President, Baker Tilly International said: “It is our opinion that family businesses valuing trillions of dollars will change hands over the next decade as the baby boomer generation pass their businesses on. Many of those retiring currently have no succession strategy. To achieve the best possible outcome, owners need to understand the many complex family, individual and business issues that must be addressed in the succession process.”
To address the complex structures of family businesses, the findings of the research have been condensed into eight principles of succession which are intended to be a practical guide to how family businesses should view and conduct their succession process. Key findings from the research include:
Eight principles of succession
- Succession is not retirement
- Start with readiness
- Set your goals before the journey
- Price is not first
- Harmony is a must
- Plan early, start earlier
- Equality of not equal
- Ask before you get lost
What are the main triggers for a business to commence succession?
- 24% owner ready to step down
- 16% next generation ready to step up
- 15% health issues
- 10% taxation/estate planning
- 9% death in the family
- 27% other triggers (comprised of seven remaining triggers)
What were the most important considerations in the succession process?
- Family harmony
- Continuity of the business
- Ongoing jobs for my employees
What is happening with the business when succession is completed?
- 57% said the business will be kept in the family
- 27% said the business will be sold
- 16% are unsure what will happen
Where the business is retained, who will be the next CEO?
- 44% indicated it will be a family member
- 36% said a non-family member
- 20% are unsure
Download the full report here.