A new survey by PricewaterhouseCoopers LLP shows that the majority of family-owned businesses in the U.S. lack a succession plan — and that’s not good news for the next generation that will eventually take over the company.
According to an article in CFO.com:
“PwC surveyed 154 owners, leaders and top executives of U.S. family businesses and found that 73% of respondents admitted they do not have a documented and robust succession plan in place for senior roles. Moreover, two-in-five respondents say it would be difficult to hand over complete control to their successors, and 56% would remain involved in management longer than optimum to ensure a smooth transition.
This does not bode well for survey respondents who are “next-generation” family members, as 47% say the delay in handing over the reigns was creating an age gap that was making succession more difficult.”
Alfred Peguero of PwC labeled this “Sticky Baton Syndrome,” in which the older generation of management hands over control of the firm in theory, but remains in charge of what really matters. As a result, transitions take longer and potential successors don’t gain the experience they need to run the company.
Here at Sponsel CPA Group, we advise business owners to start planning 5 to 10 years out for succession — though it’s never really too late to get started. If you would like to learn more, read our ongoing series on succession planning, or contact me at (317) 608-6694 or email [email protected].