The Secrets of Succession: Part One – introduction

Published research has repeatedly shown that only a very small minority of family businesses survive intact for more than two generations of ownership. But there is, equally, clear evidence that this is not an inevitable outcome and that (not surprisingly) effective planning is the key to success. For example, findings published by Investec in December 2023 indicate that over 80% of businesses which do have a robust succession plan in place expect to pass the business to the next generation and are confident the skills and expertise are in place to make a success of that process. But research undertaken in late 2024 indicates that almost 70% of businesses have no succession plan at all, and almost 50% of families have never discussed the topic of succession.

For us at Kirk Newsholme, helping our clients to manage a positive outcome in respect of their business succession challenges is one of the most satisfying ways for us to give real help to our clients, and often for our clients represents one of the most important ways we can help add value to them.

The challenges to devising and implementing a successful strategy come from numerous directions. The tax system may present a barrier to achieving succession plans and with current changes to inheritance tax and the reduction of tax relief for business assets, with further changes speculated, this is very much a live issue.

In some cases generational succession may be limited because an exit is the best strategy with private equity or a larger and better resourced owner providing the best route for the business to thrive and at the same time presenting longer term financial security for exiting owners and their families.

Sometimes the right opportunity almost literally lands on the doormat unexpectedly. But the benefit of having groomed the business in advance of even the possibility of such a situation arising cannot be understated if the best possible outcome is to be obtained from what will be for most business owners a once in a lifetime opportunity.

In the next quarterly KN Insight articles within this succession series, we will expand on how some of these and other challenges can be managed and the opportunities maximised in order to build a succession strategy which will deliver the rewards from what are often years of devotion and hard work towards building a successful business.