Preparing or Procrastinating? How the World’s Largest Family Businesses Undertake Successful Successions

Succession is a hot topic for family business leaders. Around the time of leadership succession, emotions often flare, relationships undergo stressful changes, and the success – or failure – of an effective transition can impact the family and the business for years.

With this report, we consider how some of the largest, longest-lasting family businesses in the world produce thriving successions generation after generation.

Analyzing our data from this global survey, we found that they lay the groundwork for new leadership long before succession occurs by:

1. Clearly defining who is responsible for succession
2. Focusing on next-generation preparation – but not necessarily on outside work experience
3. Nurturing an entrepreneurial culture
4. Working to attract top talent

As we explore their long-term preparations, we will illuminate the factors that help these family firms manage more effective successions while minimizing turmoil and disruption.

Are you succession savvy?

Succession planning is not an easy, straightforward process. As we discuss here, it’s vital to prepare the best possible environment for succession to succeed. But even as that groundwork is being laid, every important stakeholder – the owners, the family members, the business leaders – should begin thinking about their expectations for the day the succession actually occurs.

Start the process by asking questions that are aligned with the four dimensions of every successful succession: leadership, ownership, legacy and values, and wealth transition.

• Leadership: Have you identified who should lead the business going forward? Are you willing to transfer control?
• Ownership: Who is going to own the business after you retire? Should the owner(s) always be involved with the company?
• Legacy and values: What are the family values? Are you confident the next generation will carry these values forward?
• Wealth transition: Are there plans on how to share wealth with the family members? How will the owner(s) remain financially secure after transferring the business?

After reflecting on these four dimensions and discussing them with all key stakeholders, you might not have a plan, but you will have the right mindset. Read the full report, "Preparing or procrastinating? How the world’s largest family businesses undertake successful successions."

Does a non-family CFO have a role in the succession planning of the family business? The answer is absolutely. In fact, CFOs are often critical to the development and execution of a strategic succession plan to guide the business and the family. Learn what we’ve identified as the four key steps successful family businesses take to prepare for succession and how the CFO can play a critical role in driving the process. EY will discuss this topic at our breakfast session, "The Family Business CFO - Are You in the Succession Planning Driver’s Seat?" at the FEI Summit at the Broadmoor in Colorado Springs on Tuesday, May 24th. Please visit us in the exhibit hall at booth #204. Presented by Steve Harpole, Partner, EY Americas Family Business Tax Leader.

Visit ey.com/familybusiness for more information about our Family Business services. Follow us on Twitter: @EY_FamilyBiz, @CarrieGHall, #EYFambiz.