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Just one in five students with a family business background is open to eventually taking control of the family firm, according to a new global report issued by Ernst & Young.
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Family firms facing extinction, EY warns
25 September 2015
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9 minute read
The report, titled Coming home or breaking free?, identified and examined the succession planning and future intentions of more than 34,000 family businesses around the globe.
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A majority of students who were potential successor owners of the business did not have aspirations to take over the family firm, with succession intentions dropping 30 per cent from figures in comparable 2011 research.
Ian Burgess, EY Oceania family business leader, noted that with younger people eager to explore their own options within the economy, the challenge for family businesses is to convince them that “their long-term futures lay within their businesses”.
“In many ways, this is a healthy attitude. But the challenge for family businesses is how to harness the next generation’s ambitions to break free to benefit the family firm in the longer term,” Mr Burgess added.
With external experience highly sought after by new graduates, Mr Burgess stressed the importance of ensuring that family businesses attract successors “back into the fold” once that experience has been gained.
“Having a clear succession plan in place is paramount in this environment. Family members must be willing to address the issue head-on through an open and ongoing dialogue,” he said.
Mr Burgess added that while interest from potential successors has declined, those who do choose to take control of the family business may be better placed for success.
“Clearly the succession career path is in competition with other career options, such as taking another job or starting a company. But this isn’t necessarily bad news for family businesses,” he said.
“Those that actually wish to join the parental firm may be more motivated and better trained to take on the challenge."
AccountantsDaily has previously detailed accountants' struggles to undertake proper succession planning, and potential issues with retirement funding.
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