Ireland's family-run firms urged to consider succession planning

Ireland’s family-run firms urged to consider succession planning

Less than a fifth of family-run small businesses across Ireland have a clearly defined succession plan, according to a survey by PricewaterhouseCoopers (PwC).

This statistic is all the more alarming when you consider that half (53%) of all owners of family-run businesses envisage passing their company on to the next generation within the next five years.

The PwC report found that half of Irish family business owners had no succession plan in place or weren’t aware if they did. Just one third of respondents had an informal succession plan in place.

John Dillon, partner for entrepreneurial and private, PwC, warned of the complexities of passing on ownership of a family business, particularly as it moves through third and successive generations when family networks are more extensive.

“There’s a risk that the succession issue could ultimately distract from running the family business itself,” said Dillon.

Mr Dillon recommends that family business owners should consult the next generation of their family to ascertain their appetite for taking the reins in future.

Dillon believes that a key part of those conversations should be ensuring the wider family is on the same page and that the next generation are equipped with the necessary qualifications and skills.

“If everybody understands what’s happening then that’s fine. But when you talk about families from the point of view where it’s not just the immediate family, it’s in-laws, it’s relations,” added Dillon.

“As you go down through the generations, people will have different perspectives in terms of what their right of ownership is, and what wing of the family should be driving the business forward.

“You can’t [resolve] that in an informal way.”

Family-owned businesses account for a large percentage of Ireland’s small and medium-sized enterprises (SMEs).

According to PwC’s 2019 Irish Family Business Report, more than four-fifths (86%) of family-run businesses anticipate growing in the next two years.

Most respondents expect to make single-digit growth by the turn of the next decade, despite the backdrop of the UK’s impending departure from the European Union (EU).

Are you thinking of selling, transferring or disposing of your business assets to another family member? You could be liable for capital gains tax (CGT).

Your local TaxAssist Accountant can advise you on your likely capital gains tax liabilities and pinpoint any reliefs and exemptions you may be entitled to.

To arrange a free initial consultation on the future ownership of your family business, please don’t hesitate to contact our friendly and experienced team on 1890 98 76 09 or drop us a line using our online enquiry form.

Last updated: 2nd May 2024