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Next-generation family businesses
Evolution – keeping family values alive
Worldwide, only one out of three family businesses successfully will make the transition to the next generation. Family businesses are most vulnerable at times of transition. There is a paradox of, for example, the desire to maintain and respect tradition whilst also striving to adapt and progress in response to changing business environments. Deloitte EMEA Family Business Centre has conducted in-depth interviews with almost 100 future leaders of family-owned companies across Europe, the Middle East, and the Africa region.
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 internationalisation, innovation and digitization. At the same time, they have a desire to maintain the core family values of the business and respect the legacy of the generations before.
The main challenges that the next generation of family business leaders are facing:
- Maintaining the family character of the business and keeping the family values alive
- Growing the company in a rapidly-changing economic and business environment
- Retaining independence in ownership (Though 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 styles will differ to previous generations
- 56% intend to change the family company’s strategy
- 56% intend to modify corporate governance structures
- 51% intend to take more risks than their predecessors, within stricter parameters
Innovation is important to all generation:
- Innovation is a top 3 priority for 76% of our respondents
- 55% believe that their companies innovate at a faster pace than competition
- 61% of current family members are well aware of the need for innovation (61%) but at present, are less willing to take on the associated risks (40%)