Family Business Ownership Trends

It is inevitable that every business owner must exit at some point, most often by an internal transfer or a sale to an outside party. All business owners prefer to exit on their own terms and timeline, but often that is not the case due to unexpected shifts in the economic environment, rapid technological changes or alterations in the owners’ personal priorities or health.

Preparing for the future seems to be a major pain point for many family businesses owners. Only 23% of owners have a formal transition plan in place today, according to a recent study on succession planning for U.S. family-owned businesses by PwC.

Of the family-owned companies that plan to transition ownership within the next five years, just 52% expect to keep the business’ ownership in the family per PwC’s report. This is the lowest rate seen since 2010.

Family-owned companies planning a transition in the next 5 years are also looking at a sale as their exit strategy more now than in previous years. Thirty-percent said they would sell to an outside party, which is up from 12% in 2012 and 19% in 2014. Owners expecting to pass the business onto the next generation to both own and run it was at 41% in 2016, continuing its downward trend from 52% in 2012 and 48% in 2014.

Imagine you had to exit your company today.

Do you know your personal and business objectives for your transition out?

Do you have a strategy and are you prepared?

If it comes time to exit and you are unprepared, you may not be able to capitalize on your life’s work.No matter your level of preparation, thinking and talking about the future of your business will be a point of stress. Ensure you are armed with the most accurate data and various options available as you continue to build your strategic succession plan.

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