Nearly half of all family businesses in the CEE region plan changes in ownership within the next 5 years. But most of them don’t have clear processes in place for this turnover and require restructuring to be competitive in the future.
Family businesses have been growing rapidly across the region since the big social change in the early 1990's. Now, 20-25 years on, many of the founders face the biggest task: how to hand over the leadership to a younger member of the family. As many pioneering business owners approach retirement, 40% plan changes in ownership within the next 5 years. At the same time, many are looking to improve growth and profitability by expanding international sales, transforming operations, and investing in technology.
The next generation
According to PwC's latest global report 61% of CEE family businesses plan to pass down ownership to the next generation at some point in the future, while 28% plan to sell or float the business. PwC interviewed 2,378 family businesses in 40 countries worldwide, including 162 in Central and Eastern Europe.
To take over management effectively, next generation leaders need experience before taking the helm. So it is rather surprising that most CEE family businesses do not have a clear successor or formal succession plan in place. Only 39% of them have a succession plan for at least some roles compared to 53% globally. Likewise, only 29% of CEE family businesses currently have next generation family members working for the business, compared with 55% globally.
Conflicts about the management of the business can have terrible consequences on family relationships, while family issues – such as death, divorce, illness or accident – can throw the business into disarray. Having clear processes in place can prevent disagreements about the business from escalating into family crises, and vice versa. However, only 52% of CEE family businesses have a procedure in place to deal with conflict. This is much lower than the global average of 83%
Growing despite challenging markets
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