Family businesses in the Midlands are failing to plan ahead

Family businesses in the Midlands are putting their financial futures at risk because they are failing to plan ahead for a change of leadership and where they do have a plan; it is not as thorough as it needs to be, according to a new survey by PricewaterhouseCoopers.

One in four (28%) family businesses in the UK are expecting to change hands in the next five years and of these, only around half (55%) have a succession plan in place and only one in three (30%) have chosen a successor, according to PricewaterhouseCoopers Global Family Business Survey.

Gary Telford, head of the private client practice at PricewaterhouseCoopers in the Midlands, said:

“Family-owned businesses in the region have had a successful year and are competing confidently with the leaders in their sectors.  But many are facing major internal and external changes and need to plan for them rigorously.

“Passing the family business onto the next generation can be difficult; often every bit as challenging as a third party sale. The survey results suggest that many are not facing up to the tough personal choices involved and they are putting their businesses at risk as a result.”

According to the survey, most disagreements within family-run businesses are about the strategic direction of the business and the performance of individual family members. Such disagreements could be the reason why so many family businesses in the UK – around one in three (34%) of those that have a succession plan in place - expect successors for senior management roles to come from outside the family.

Gary Telford at PricewaterhouseCoopers said:

“Disagreements can arise at any time but can pose particular problems for family businesses at times of change. A succession plan can be very useful, giving the family members a definitive, pre-agreed process to follow.”

Despite the obvious issues that can arise for family-owned businesses, there are also opportunities for such businesses to strengthen their position in their target marketplace.

Gary Telford at PricewaterhouseCoopers concluded:

“In the Midlands, there are many good examples of family-owned businesses that have continued to perform strongly for several generations. These businesses have remained focused on delivering their business strategy and have continued to invest in business development.

“Such businesses realise that failing to plan ahead for a change of leadership could jeopardise their hard-won success.”

Contact details
Email: Gary Telford
Tel: +44 (0)121 265 6507