The big wealth transition is underway, with ownership of more than 60 per cent of family enterprises expected to be handed off within the next decade, according to new research released by Family Enterprise Foundation. Within a shorter time frame – seven years – close to 40 per cent of transitions are expected to occur.
“Ready or not, transfers within Canada’s family businesses are coming soon. It’s imperative that family leaders prepare their family, as well as their business, for this imminent transition of wealth, ownership and leadership,” says Olivier de Richoufftz, General Secretary, Family Enterprise Foundation.
This research, supported by KPMG Family Office, provides the most comprehensive picture of transition intentions in Canadian business families to date. Preliminary results are summarized in Ready, Willing and Interested – or NOT? Canadian Family Business Transition Intentions.
Intergenerational transfers of power stir up apprehension among owners
The main concern among 51 per cent of owners is that the next generation is not ready. A secondary worry cited by 39 per cent is that next generation family members are not interested in taking over.
“Clearly, the senior generation doesn’t think the next generation is equipped to take over. Is that perception or reality? A crucial question for business families to explore, together,” says Margaret-Jean Mannix, Chair, Family Enterprise Foundation.
“After working hard to build a strong and successful family business, founders may assume that their children share their passion and drive, but this is not always the case. Having meaningful conversations about the future is a critical first step to family wealth and continuity planning,” says Richa Arora, FEA, Senior Family Advisor, KPMG Family Office.
Concerns about tax implications (22 per cent), worries about the impact on family dynamics (17 per cent) and the willingness of the senior generation to let go (15 per cent) are also issues weighing on the transition decision.
Will transition occur within or outside the family?
Half (52 per cent) of respondents expect to transition the business to family, while a third (36 per cent) plan to transfer it out of the family. “Having someone within the family take over the business” is cited by 77 per cent as important – this sentiment is potentially at odds with their intentions come transition time.
SOURCE Family Enterprise Foundation