COMMENT
Passing on the business baton to the next family member is not always that simple…
Business Succession The Next Generation
Planning how your business will pass to the next generation of your family or into new ownership is vital to get right, says Dave Howell.
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o business owner wants to think about succession, but ignoring this critical point in
your company’s life can cause huge amounts of disruption. However, careful pre-planning
can ensure that the transition is smooth and that your business remains sustainable and profi table long into the future. Generational ownership
of a business poses its own particular issues when succession is considered. T e equity ownership across family members can be a barrier, as are interpersonal relationships
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between family members and any outside management personnel that the business is using. Indeed, in its last report, PwC
(Pricewaterhouse Coopers) stated: “T e very essence of the family business is, of course, that it has been passed from one generation to the next, but the moment of transition – and the years leading up to it – can make or break the fi rm’s future success. “Some 41 per cent of our
respondents intend to pass on both the ownership and management of their business to the next generation, though it was noticeable that more
than half of them still remained unsure whether the next generation would have the skills and enthusiasm to do this successfully.” Clive Lewis, head of
enterprise at the Institute of Chartered Accountants in England and Wales, added: “T e major problem for a family business owner is that in the eyes of customers, suppliers, fi nance providers and staff , they are the business. So when transferring it to a family member, it needs to be considered how the key stakeholders view the succession. “Running a business can be
a lonely and very demanding experience. Does the family member have the character to take the business forward? Do they have the requisite skills or can they be acquired with experience or training?” Sona Sherratt, a client
director at Ashridge Business School, pointed out: “T e topic of succession in a family business can be tricky. Politics can play a large part in discussions and conversations can become emotive. T e three key things to look for are, fi rstly, the right skill set, secondly, the right leadership ability and, lastly, a good handover period.”
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