Family Businesses Struggle with Succession

PwC (PricewaterhouseCoopers) has conducted the US Family Business Survey since 2002. Since their first report, the economy has changed drastically. In the 2014-2015 survey PwC recently issued, they provide interesting insights on family owned businesses throughout America. To get diverse data on the state of US family firms, they interviewed 154 businesses across sectors and lifecycles.

Overall, owners tend to be more optimistic than in 2012. But the optimism is not without challenges in the background. Many are trying to adopt new technology to compete in the post-recession economy, deal with changing market conditions, and still face the ever-present reality of succession planning. 

In the report, a couple pages are designated to succession. Based on feedback from those surveyed, the report coined the term “Sticky Baton Syndrome” for the succession planning challenges senior business owners face. In fact, of those surveyed, only 28% have “a robust and documented succession plan for senior roles.”[1]  

As a result, senior owners are faced with succession in theory but not in practice. They may not have CEO after their name, but still play a vital role in the direction of the company and remain attached years after they start the transition process. To accommodate for a longer transition period, some are bringing in outside management that have more experience.

The companies surveyed were middle market and larger companies, many with tens of millions in revenue and a few in the Fortune 500. 

If owners and family members are able to develop and implement an exit plan, they stand a much better chance of successfully passing on the reigns to the next generation. 

You can read the report here: