Business panel: Will a business survive being moved to the next generation?

AS THE old saying goes, families can go ‘from rags to rags in three generations’. And it’s a sentiment that rings true with those working in the wealth and private client sector who deal with family succession planning on a daily basis.

If research from Forbes magazine is any indicator, fewer than one third of family businesses survive the transition from first to second generation ownership, and a further 50 per cent fail when transferring from second generation to third.

So, what role can advisers play to help family businesses through the succession minefield?

This was one of the key questions I addressed at a recent roundtable I chaired in London where Estera brought together senior wealth professionals to discuss ‘The Great Wealth Transfer’, as $30 trillion is expected to change hands over the next 30 years.

Just a few of the points made about family business succession included:

. The need to set out the values of the family, alongside the strategy of the business

. The increasing importance of ESG and philanthropy to the next generation and, accordingly, to their businesses

. Who in the next generation will have a role in the business and exactly what will that role be?

. Educating the next generation about the intricacies of helping run the family business

. The pivotal role that advisers play in future-proofing the continued success of the business

Succession is a significant moment in a family business’s life and an issue that requires analysis from the perspectives of family, management, and ownership systems in order to understand the perspectives of the different stakeholders.

Advisers, such as Estera, can use our knowledge of the family and our technical expertise to help achieve a successful outcome for everyone involved and add immense value to this critical process.