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A guide to family business succession planning

Friday, 11 February 2022

Succession planning is one of the most sensitive issues, and COVID-19 appears to have concentrated minds in this area.   Topics such as

 

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Tánaiste and Minister Donohoe launch new €90m fund for Irish start-ups

Thursday, 10 February 2022

The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD and the Minister for Finance, Paschal Donohoe TD launched a new

 

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EFB-KPMG 2020 Global Tax Monitor

Thursday, 03 December 2020

In this challenging year, KPMG have explored the situation of taxation on family businesses in 54 countries and territories in order to offer an

 

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A guide to family business succession planning
Friday, 11 February 2022 15:02

Succession planning is one of the most sensitive issues, and COVID-19 appears to have concentrated minds in this area.

 

Topics such as succession can be emotional, which makes them difficult to navigate and, as a result, tempting to avoid.

 

The 2021 PWC Family Business survey shows that 23% of Irish family businesses have a robust, documented and communicated succession plan in place, compared with 30% globally.

 

 

Time for clarity

 

Running a family business can be daunting, frustrating and rewarding. Among the most difficult discussions for any entrepreneur to have with their family, is succession planning. Yet, such an engaged discussion is like a gift one can give to their children, siblings and employees.

 

A lack of clarity in management leads to dysfunction. Most families do not want to have conversations about mortality or illness. Bake in the family pecking order with discussions about money and you have a recipe for procrastination.

 

Failure to discuss such matters can be both financially and emotionally devastating. It is simply short-sighted and selfish not to engage in such planning but it doesn't have to be that way. Creating a succession plan is not unbearably difficult. Here are some steps business owners can take to create a succession plan:

 

 

Set goals for ownership

 

During succession planning in family business, different family members can have different visions. For instance, while some members might want to sustain the company for future generations, the younger generation may have no interest in being involved in the business.

 

Additionally, when faced with challenging decisions like whether to sell the company or stick it out, only half the family may want to cash out.

Different generations can also have different expansion plans, with the first generation wanting to re-focus on traditional business operations, while the second wants to pivot towards new industries.

 

Every business should have a written strategic plan. Within the strategic plan, management can clarify its growth plan, financial targets and transition of ownership. Then, you need an estate plan. A strategic plan and estate plan can and should be built in parallel (although a strategic plan is an evolving, fluid document). Take care in settling any family disputes, as they will only be magnified should the business owner pass.

 

 

Get the best advice

 

Having the right accountants, solicitors and managers in place, is vital. Part of a family business succession plan may be the sale of the company from one family member to another.

 

A family-to-family business sale offers many options, such as choosing a full versus discounted sale price, making instalment payments, or even gifting a business. These options provide family members with opportunities to structure a sale that may way work best for the business and the family. However, be sure to address the pros and cons to these strategies with a solicitor and financial advisor before finalising the sale.

 

Also, conduct an evaluation of your management team and assess the skills of each manager, or hire an outside firm to study their emotional intelligence and skill level. Create a grid and grade based on the managerial competencies.

 

 

Be fair and make them work!

 

Just because someone is part of the family, it doesn't mean they are the best person for the role. A level of entitlement, especially between the first and second generation, can arise when selecting key company roles. Your goal is to avoid backlash from family and also choose the best candidate for the position.

 

A company should develop internal training programmes, educational standards and results-based qualifications for candidates to be considered for leadership positions. With clear-cut systems, staffing key roles become about being qualified, not just being part of the family.

 

Also, make children work elsewhere for at least five years before bringing them into the business. Children of founders or multi-generational family members face even more scrutiny and need time to mature.

 

Train your managers (especially senior managers) on how to hold people accountable to specific performance outcomes. A methodical process will minimise perceptions of favouritism.

 

 

Identify the successors

Identify successors – both managers of the company and owners of the business. Then, identify active and non-active roles for all family members.

 

Have frank and confidential conversations with your top people about their career paths. Make certain that you have provided incentives for future senior managers to stick around. Consider hiring a coach to help develop their skills and ensure that developing new leaders is a core competency in your company.

 

 

We have a plan…

 

By following these key steps relevant to almost all family businesses, the company can create a viable succession plan, provide for the financial independence of the retiring owners, and position the business for continued success and growth.

 

As they say, a journey starts with a single step. Don't be afraid to have meaningful conversations about your succession plan. Then, go find the professionals that can help you put your plan into action.

 

Family Business Ireland is an information and support service for the founders, owners, next generation managers and professional advisors of family businesses. For over twenty years Plato has directly facilitated hundreds of family businesses throughout Ireland to successfully manage the issues of succession, legacy, transference and continuity.

 
Tánaiste and Minister Donohoe launch new €90m fund for Irish start-ups
Thursday, 10 February 2022 14:38

The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD and the Minister for Finance, Paschal Donohoe TD launched a new €90m fund for Irish start-ups yesterday at Trinity College Dublin’s Tangent Ideas Workspace for student entrepreneurs.

By investing in several underlying venture funds, the Irish Innovation Seed Fund Programme will provide vital capital to innovative Irish companies at the crucial seed stage and will be an important step in developing and growing the Irish equity ecosystem.

Investment will be targeted and prioritised in areas such as regional development, climate change and female entrepreneurship. It will focus on sectors that have experienced difficulty in attracting early stage investment including:

  • Lifesciences;
  • Healthcare & Pharma;
  • Fintech;
  • Technology & Digitalisation;
  • Food & Agri-Tech;
  • Sustainability & Climate Change; and
  • Women-Led Enterprises. 

Launching the Programme, An Tánaiste said:

“This is about backing Irish entrepreneurs and their ideas at an early stage, giving them a much-needed boost from the beginning. We’re looking for companies working in a number of areas we’ve identified as strategic opportunities for Ireland but have traditionally struggled in attracting early-stage investment, including Lifesciences, Healthcare and Pharma and those working to reduce our reliance on fossil fuels.“One of my three priorities as Minister for Enterprise, Trade and Employment is to get to the point where we’ve 2.5 million people at work in Ireland by 2024, which would be the highest level of employment we’ve ever had in the country. This Fund is an important part of that, we have to reward those creating the jobs of the future and help them reach the next stage of development.“I’m particularly pleased to see that there will be a focus on women led enterprises. We’ve traditionally seen a deficit in funding go to start-ups with female leadership teams and I think we need to correct that imbalance.” 

 

Minister Donohoe said:

“I am very pleased to announce the launch of the €90 million Irish Innovation Seed Fund Programme today. This Programme will increase early-stage funding for SMEs and is an important step in supporting our indigenous, high innovation enterprises to reach their full potential.The Irish Innovation Seed Fund Programme brings together three experienced partners in SME funding, each allocating up to €30 million - the European Investment Fund, Enterprise Ireland and the Ireland Strategic Investment Fund participating as a co-investor.The growth of indigenous business is a cornerstone of our economic model and working together, these funding partners will deliver an ambitious programme which will support our SMEs now, and as they innovate for future growth.”

 

Leo Clancy, CEO of Enterprise Ireland said:

“Since Enterprise Ireland first established our programme of venture funding in Ireland over 28 years ago, the landscape has evolved significantly.  Over that time, we have committed €630m to venture funds that have, to date, supported more than 750 Irish companies. “In our new strategy Leading in a Changing World we have committed to further accelerating entrepreneurship in Ireland. We are delighted to launch this important €90m programme with the European Investment Fund and ISIF to support innovative, early-stage companies, driving future jobs and economic growth.”

 

A first call for proposals under the programme will launch later this week on the European Investment Fund website.

 

The fund programme will be led by Enterprise Ireland, with the European Investment Fund acting as fund manager and will be structured as a fund of funds.

 

A fund of this size, backed by these three experienced partners is an important step in developing the equity ecosystem in Ireland. It aims to attract both new fund managers and new private investors to crowd-in further private equity investment into Ireland.

 

The fund programme, totalling €90 million, will be made up of a €30 million contribution from the Department of Enterprise, Trade & Employment, whilst the European Investment Fund will match this investment by providing a further €30 million. The Ireland Strategic Investment Fund will seek to co-invest with a further €30 million on selected investments. 

 

This information was taken from the Department of Enterprise, Trade and Employment. 

 
EFB-KPMG 2020 Global Tax Monitor
Thursday, 03 December 2020 09:05

In this challenging year, KPMG have explored the situation of taxation on family businesses in 54 countries and territories in order to offer an in-depth perspective on the varied tax for family business around the world. The theme of the 2020 edition is “Charting a path for the future”, a task that has been made more challenging than ever due to the continuing impact of the COVID-19 virus. Interestingly, and for the first time, they present us with the case study of a small business in comparison with a medium-sized company.

 

Please click here to download the document: http://www.europeanfamilybusinesses.eu/publications/106/103/2020-KPMG-Global-Tax-Monitor

 

 
Family Business Management Programme 2020
Wednesday, 04 March 2020 21:21

The Family Business National Centre of Excellence is inviting business founders, next generation managers and those with an interest in learning how best to manage issues such as succession, legacy, transference and planning to make contact. Applications and expressions of interest to participate in the inaugural family business programme are welcome. The National Centre of Excellence is Ireland's only specialist family business centre. For more information please contact Sinead at 021 4211433.  

 
Growing a family business - LEO Enterprise Week BOI Workbench Centre Fri 6th March 8am
Wednesday, 04 March 2020 20:57

Phil Cone of Acadeny Crests Ltd and Michael Finn NSG Ltd will be interviewed by JJ O'Connell of Family Business Ireland to discuss their growth strategies as MDs of 2nd generation family businesses. This talk is part Enterprise Week and is taking place at the BOI Workbench space Patrick St. Cork. For information go to corkcityleo.ie. 

 
Growing a family business - LEO Enterprise Week BOI Workbench Centre Fri 6th March 8am
Wednesday, 04 March 2020 20:57

Phil Cone of Acadeny Crests Ltd and Michael Finn NSG Ltd will be interviewed by JJ O'Connell of Family Business Ireland to discuss their growth strategies as MDs of 2nd generation family businesses. This talk is part Enterprise Week and is taking place at the BOI Workbench space Patrick St. Cork. For information go to corkcityleo.ie. 

 
Energia Irish Family Business Awards 2020
Wednesday, 04 March 2020 20:39

Energia Irish Family Business Awards 2020 nominations deadline extended to March 11th. 

 
Calling all small firm owner-manager/senior managers……
Wednesday, 20 February 2019 11:42

The Innovation Value Institute (IVI) at Maynooth University, Ulster University (UU), N. Ireland and Anglia Ruskin University, England are undertaking research on small to medium sized enterprise (SME) use of digital technologies or ‘digitization’.

Digitization through leveraging digital tools and technologies has already had a significant disruptive influence on many industries, yet a lot of small firms continue to struggle to achieve effective digitization, and more often see digitization as an issue for larger firms. 

 

As a small firm owner-manager/senior manager, they are very interested in your views and opinions, on various aspects of digitization for your business.

 

If interested to help you could devote some time (approximately 10 minutes) to complete the online survey, at the following link: https://bit.ly/2MVXwRy

 

In return you will:

  • Be entered into a PRIZE DRAW for 10 x 50 euro Amazon vouchers
  • Receive a copy of the summary findings of this research. Gaining insights and learning how other firms are approaching ‘digitization’.

 

 

All responses will be treated in the strictest confidence and none of the specific information provided will be identified in the final research output.

 
PWC Family Business Report 2019
Wednesday, 13 February 2019 14:59

PWC Irish Family Business Report 2019

PWC survey of over 100 businesses, conducted in late 2018, reveals that the Irish family business sector is positive about the future. They have long term goals and success in sight - and the focus is on how to achieve them.

 

Click here:  https://www.pwc.ie/reports/family-business-report-2019.html

 
The Impact of Family Business in Ireland
Sunday, 20 May 2018 21:56
Although this repost is based on findings up to 2005. It is important to know the impact that family business has in Ireland. 
 
 
This report presents a comprehensive picture of the contribution of family businesses to the traded
services sectors in Ireland. The information is sourced from the 2005 Annual Services Inquiry
(ASI). The ASI is an enterprise survey covering the retail, wholesale, real estate, renting and
business services and other selected services sectors.

 

Click on the link below to read more:

https://www.dcu.ie/centre-for-family-business/impactoffamilybusiness.shtml

 
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