Issues affecting the succession process
Only a reasonably small number of respondents to the 2011 Family Business Survey planned to hand on their business to the next generation – many will shortly find how difficult the succession process can be to implement – respondents were asked to rank a range of matters in terms of their likely effect on the succession process both from within and outside the family.
The research shows the big four succession issues are:
• the ability to generate adequate financial returns
• the financial capacity to retire
• trust in the abilities of the potential successor
• potential successors’ interest in the business
Interestingly, we have previously discussed the effect of the GFC and anecdotally have seen business owners hold off on an exit plan which might have been undertaken over the last three years – 29% of survey respondents listed the impact of the recent downturn as having a negative effect on the succession process.
Having reviewed the potential complexities it was not surprising that many respondents appeared to have avoided formal succession planning:
Yes Work in Progress No
Management 26 30.5 43.5
Control 23.5 28 48.5
Ownership 28.5 25.5 46