For family business owners, planning for what happens when they retire should be high on the agenda. New evidence from PricewaterhouseCoopers suggests, however, that only a small proportion of such businesses around the world are prepared for succession.

To highlight what is at stake, as many as 35 per cent of family companies are expected to change hands in the next five years, the PwC report, based on interviews with 1,606 companies in 35 countries, found. Of that percentage, some 53 per cent of respondents expect firms to remain in family control; 21 per cent expect a trade sale to another business; 20 per cent expect to be bought by a private equity fund, and only 8 per cent foresee a stock market flotation.  

But despite such turnover expectations, among its total global sample of family-run businesses, the report found that 47 per cent of firms had no succession plans; only 17 per cent said they had a succession plan for all senior roles.

Succession planning for businesses is an important advisory field for some private banks and wealth advisory businesses, such as at JP Morgan and Coutts & Co in the UK, among others.

Succession planning is significant also for the broader world economy, PwC said, because family-owned businesses account for as much as 90 per cent of the world’s gross domestic product per year (source: Family Firm Institute).

Among other details, the survey found that 61 per cent of respondents think they have sufficient resources to divide their assets fairly between all their heirs, including those who do not work for the business. Some 62 per cent have not provided for dealing with family and business issues.

Fieldwork for the survey was conducted between 26 May and 17 August.