Successors of family-owned businesses prepare for new entrants

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According to Deloitte’s recent NextGen Survey, 47 percent of the next generation of leaders of family-owned businesses expect that the market in which they operate will face disruption in the next two to three years. 27 percent also expect to lose market share to new entrants. These are some of the key results of the survey

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08/06/2017 |
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    Georges Kioes, Partner and Family Business Leader, Deloitte Luxembourg

Deloitte talked to 268 family-owned businesses mainly in Europe and discussed specific challenges such as succession but also growth, strategy and the accelerated speed of market changes.

The exponential pace of transformation in digital infrastructure is driving fundamental and rapid changes in the global economy. Long-living values and processes become outdated faster than before, which poses a challenge to some tradition-oriented family businesses,” states Georges Kioes, Partner and Family Business Leader at Deloitte Luxembourg.

Facing disruption
A majority of the next generation leaders of family-owned companies feels well prepared to anticipate disruption. The survey shows that they have a clear picture of the direction in which their industry is moving and that they understand the nature of the disruptive forces in the market and in their company. They indicate two big challenges: first, the structure of leadership revolves too much around the family/management. Second, there is a lack of skills among employees to optimally perform in a disruptive environment. “17 percent of future family business leaders believe their employees are not ready to face disruption, while 35 percent think they only partly have the necessary skills. These findings show that there is still some work to do in preparing all members of family businesses to be ready for disruption. Nonetheless, the feedback we received from Luxembourg survey participants is that disruption is perceived as an opportunity rather than an obstacle,” explains Georges Kioes.

Fast and agile
According to the next generation of family business leaders, the biggest disrupting factor for family-owned businesses is not market disruption (20 percent), but the changes in family relationships (24 percent). While 73 percent state that succession is a natural moment of disruption, it is also seen as the biggest disrupting factor by 14 percent of all interviewees.

The next generation leaders are more aware of the meaning and effect of disruption than the previous generation. Interviewees indicate that the biggest advantage family-owned businesses have in times of disruption is that they are ‘fast’ and ‘agile’ when compared to other organizations.

About the NextGen Survey
The NextGen Survey 2017 is a Deloitte initiative and was conducted by holding in-depth interviews with 268 successors of family-owned companies in the EMEA region (Europe, Middle East and Africa). Themes such as succession, disruption, growth and strategy were discussed. The survey was held from January to April 2017.

The full report of the NextGen Survey 2017 is available at:

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