Succession planning
Handing over the reins, sharing the wealth
If recessions are unpleasant, succession and financial planning can be even more stressful.
More than a quarter of the family businesses in our survey—and fully a third in the emerging markets—were anticipating a change in leadership during the next five years. Of these, most respondents expected the company to stay in the family. However, almost half the companies (skewed toward the smaller organisations) in our sample have no succession plan and only half of those that do have designated a particular individual to take over the top job.Managing ownership of the business equitably can be equally challenging, especially in the wake of the downturn. Only 61% of the entrepreneurs we interviewed said they had enough resources to divide their assets fairly between all their heirs, including relatives who don’t work for the company. A considerable number also told us they haven’t valued their company, assessed their potential corporate or inheritance tax liabilities, or made provisions for dealing with the serious illness or sudden death of key personnel.
Fortunately, the great majority of family proprietors recognise the value of good management and believe the best way of retaining senior executives is to compensate them well, with annual bonuses an especially favoured form of reward.
