Thursday, 23 October 2014 01:06
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In an effort to understand what it takes to ensure that family businesses survive and thrive across generations, the Association of Chartered Certified Accountants (ACCA) has announced a knowledge-sharing workshop, organised in collaboration with KPMG in Sri Lanka – who came on aboard as the knowledge partner – on Tuesday 28 October from 3 p.m. to 7 p.m., at the Winchester room of the Kingsbury Hotel.
The event titled ‘The Next Big Thing: Succession and Next Generation in Family Business’ will feature KPMG in Germany Family Enterprise Specialist and Senior Manager, Dr. Alexander Koeberle-Schmid, who will share his valuable technical insight and experience, gained from working with some of the most successful family-owned businesses around the world.
Succession and integrating the next generation into business is perhaps the toughest and most critical challenge of a family business, as it involves the process of transitioning the management and ownership as well as leadership development.
Family members typically play a controlling role in both management succession as well as ownership succession. Sustaining a family business beyond generations is often a challenge and fewer than half of all family businesses survive the transition from one generation to the next. As such, the effective integration and management of the family dynamic will have a determining effect on the success of the succession process.
Most family business owners are not aware of all the options and strategies available to them in the succession process. Everyone knows there are business and family issues that need to be dealt with. However, nobody knows how, or is comfortable with managing the communication necessary to address these issues.
While many of these issues tend to slowly percolate over time, they tend to rise to the surface during the succession process since important decisions about the future are being contemplated.
KPMG in Sri Lanka Family Business Division Partner and Head Thamali Rodrigo stated: “Family business succession is not a one-time event worked out between the owners and their trusted advisers. It is a process of working through succession issues with the current owners and the active family members, while keeping the broader family informed of its outcome.”
There is no need for family businesses to stall or delay the succession process because they have not formulated all the answers to ownership issues. Most family businesses may not have clear-cut answers to the many ownership issues they face. This should not discourage family business owners from starting the process. In effect, discussing the ownership issues in a formal setting with potential successors and outside expertise will greatly facilitate decision-making.
Further commenting, Thamali said: “There needs to be a departure from the traditional approach to business succession to a customised approach for family business. The key in this, is managing the ‘family dynamic or family component’ by way of a formalised proven approach. By applying this proven approach, we hope to contribute towards the reversal of the alarming succession statistics.”
