Nearly three quarters of family businesses in the US have no intention of passing their business on to the next generation and about the same numbers don’t have a succession plan in place, according to a report by the accountancy group, Baker Tilly.
The report said that around 73% of those surveyed do not see a compelling reason to pass their business to a family member and would consider a sale of the business. “We’re in a new era of succession. The notion that the eldest child is going to take over the business when the parent is ready to retire is not a viable option for the continuity of family owned businesses”, said Carl Johnson of Baker Tilly International.
The report also said that succession has become more complicated, involving more than just the transfer of wealth, but also the transfer of knowledge and skills. “This is because the level of skills required to effectively run a business in today’s environment is far greater than it was in previous generations, said Johnson. “If business owners haven’t helped the next generation develop these skills, the capital value of the business is going to be impacted.”
Baker Tilly said that if succession of many family businesses wasn’t handled well it could impact the global economy.