Article
Next-generation family businesses
Evolution – keeping family values alive
Worldwide, even only one out of three family businesses successfully make the transition from the one generation to the next. Family businesses are most vulnerable at times of transition. There is the paradox of, for example, the desire to maintain and respect tradition whilst striving to adapt and progress in response to changing business environment. Deloitte EMEA Family Business Center conducted in-depth interviews with almost 100 future leaders of family-owned companies across the Europe, the Middle East and Africa region.
Overview
We found that in today’s family businesses, a new generation is emerging with many highly qualified young men and women, often with experience in other companies and abroad, ready to face the challenges ahead, such as internationalization, innovation and digitisation – whilst maintaining the core family values of the business and respecting the legacy of the generations before.
Key findings
Challenges
The main challenges that the next generation of family business leaders face:
- To maintain the family character of the business and keep the family values alive
- To grow the company in a rapidly-changing economic and business environment
- To retain independence in ownership, although 40% of respondents do not rule out the possibility of external investors
In their own way
The next generation of family business leaders intend to make changes when they take over:
- 80% say that their leadership style will be different compared to the previous generation
- 56% will change the family company’s strategy
- 56% will change corporate governance structures
- 51% intend to take more risks than their predecessors, but in a more controlled way
Innovation
Innovation is important to the next generation:
- Top 3 priority for 76% of respondents
- 55% say that their companies innovate at a faster pace than competition
- The previous generation of family members is well aware of the need for innovation (61%) but is not so willing to take on the associated risks (40%)
Next-generation family businesses