Children of family-owned firms’ founders must earn their place in the boardroom, survey reveals

October 17, 2019

The days of the South West’s family-owned firms automatically being passed on to their founders’ offspring are long gone, with few now believing in a right to succession, according a new survey.

Instead, most owners want to ensure their offspring are qualified to take over on merit not blood ties and should only gain control after gaining experience elsewhere or obtaining relevant professional qualifications. 

The latest Family Business Survey from financial and professional services firm Smith & Williamson, which covers the South West from an office in Bristol, reveals that most owners of family firms in the region are concerned about ensuring they have a family member with the ability and inclination to take over.

While 80% believe it is important for family members to be involved in the business, 78% said it was vital that they have business or professional qualifications if they are to enter an executive role.

Most were keen to avoid feelings of entitlement in their children, instead involving them when they had demonstrated capability and an interest in the business. Just under a fifth would sell the business if the right family member could not be found to take over.

And while 78% felt it was important to encourage the next generation into the business, they were also concerned about taking them away from their chosen career path and protecting them from the pressure of family expectations.

While just over half – 52% – said that becoming involved in the family firm should begin before the age of 18, the majority said the next generation should only start receiving income at or after they reach 25.

The most common methods of encouraging business awareness included mentoring and internships with non-family companies, followed closely by internships or apprenticeships within the family business.

Smith & Williamson partner Louise Thornhill, pictured, who is also head of investment management in its Bristol office, said: “The next generation of South West based business-owning families have to juggle the heritage and success of the business they are inheriting whilst ensuring it remains viable and relevant in an ever-changing world.

“To prepare, children must prove they have earned their place in the business, demonstrating responsibility and family values, rather than an automatic right and often first gaining experiences outside the family business, both for their own personal development and the benefit of the business.”




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