30 THE KNOWLEDGE
PASS IT ON
Succession is never easy. While over 70% of UK businesses are
family-owned, research has shown that only 13% of family businesses
survive beyond the third generation. Plan succession properly and
the business can survive for several generations to come. Failing to
plan means you’re planning to fail, so how can families ensure they
survive the potential pitfalls? Juliette Johnson reports.
The key objectives of succession are typically to protect family Succession planning and management need not be the horror
harmony, family wealth and the family business but during a period story of family skeletons and feuds. If well planned, it can be a
of generational transition, the business is at its most vulnerable and period of great growth and fulfilment for both the family and the
feelings run high. The transition of the family business raises complex business
and emotion-laden problems and with so many public tales of
acrimony and legal wrangling in relation to business succession, it is All too often we read about family businesses in crisis, those in
little wonder that many family business founders fail to plan. However, conflict or those that did not survive the transition. Little recognition
ironically, it is this very failure to plan that causes the disharmony that is given to those who do survive through adapting to new
they try so hard to avoid in the first place. developments and challenges and have found their key to long
term success.
By planning ahead, effective succession strategies can be
formulated and implemented in an open and positive Source:
environment. There is every reason for optimism. Juliette Johnson, Senior Family Business Adviser for Coutts & Co
www.coutts.com
While no two family businesses will ever be the same, there are
three core elements common to all; the family, the business and
the owners. A change in the make up, structure or dynamics in any
one of those three elements will inevitably impact the other two.
The Coutts Prize for Family Business aims to
Good succession planning means being cognisant of this fact and
recognise this success. Now in its fourth year,
adopting a holistic approach to transitional management. the prize recognises the best run family
businesses in England and Wales. Success is not
Succession planning should therefore be separated into the
simply measured by business performance, but
succession of ownership and the succession of management. It
may be, for example, that the best solution is for ownership of the
by a combination of high standards of family
business to remain within the family but for the management to be
governance, corporate governance, social
left in the hands of outside professionals. Whatever the outcome, it
responsibility, philanthropy as well as a
is important that business decisions are taken for business reasons competitive market position and consistent
and nor family ones, as often happens.
financial growth. The awards complement
Coutts’ successful programme for Family
It is crucial to decide what the vision for the business is and to be
sensitive to the differing expectations of the next generation. Does
Business Forums that are held throughout the UK
everyone understand and buy into it? Has everyone had the
and Family Business Advisory Service.
opportunity to influence it? Are the next generation adequately
Coutts & Co are currently inviting nominations
prepared to take on the responsibility of becoming shareholders
for the Coutts Prize for Family Business 2008/9, in
and/or managers of the business? If you only plan to give shares to
those who work in the business, how can you be fair to those family
three turnover categories small £1-5m; medium
members who do not?
£5-25m; and large £25m+. Nomination packs
will be distributed between 1 September and
Managing the succession process in a family business tends to be
31 October.
most successful when it results from a well-planned partnership with
the next generation. This partnership hinges upon effective
If you would like to receive a nomination pack
communication and a clearly aligned vision between current and for the Coutts Prize for Family Business 2008/9
future generations.
please email robert.jacob@coutts.com
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