12th December 2013
Baker Tilly Mooney Moore has participated in a global research study which has found that family harmony is a key consideration across all stages of the succession process. The global survey found 68% of respondents stating it was important before starting the business succession planning process, rising to 75% after the process was completed.
The Baker Tilly International Business Succession survey canvassed opinion from 1,650 people across 55 countries before, during and after their business succession process. The results showed succession is key in determining the capital value, worth, market price and value of any business and therefore a family’s wealth.
“It is our opinion that family businesses valued at 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,” said John O’Rourke, Baker Tilly Mooney Moore’s Consulting Partner.
To address the complex structures of family businesses, the findings 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.
“Creating, sustaining and enhancing harmony through the succession process is a must. In engaging with family and other persons involved in succession, business owners must recognise that those involved are seeking certainty about the process and about their future. They need to feel a sense of contribution and that there is a positive outcome where there are opportunities for individual growth,” John said.
Key findings from the research include:
Eight principles of succession
1. Succession is not retirement
2. Start with readiness
3. Set your goals before the journey
4. Price is not first
5. Harmony is a must
6. Plan early, start earlier
7. Equality of not equal
8. 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
To discuss this in more detail please contact John O'Rourke on 028 90 323466
The full report is available here