‘Wise succession key to survival of family firms’

SEVEN out of 10 businesses don’t survive past the third generation of family ownership and many fail because they do not get the succession issue right.

Speaking at the Retail Jewellers of Ireland (RJI) annual conference, Alan Crosbie, chairman of Thomas Crosbie Holdings (parent company of the Irish Examiner) and adjunct professor at the John C Kelleher Family Business Centre at UCC, said few family companies managed to make the leap from one generation to another an easy task.

“Sensible, orderly succession happens in a tiny percentage of family businesses.

“The issue of succession for the majority is all about drama, conflict, bloody-mindedness, tragedy, financial disaster and generational strife,” Mr Crosbie told the conference in Dublin yesterday.

Many family businesses simply divided the company into equal shares among their children in the expectation that everything would run just as smoothly. In reality, the opposite was likely to happen.

He argued that the best option was to decide on the best person to take over. It could be a family member, another person from within the company, or an outsider.

Mr Crosbie said that owners should also be clear that when they hand over the reins to a new generation, they should not interfere with the running of the company.

He added: “I believe very strongly that the key for the present generation in any family business is that of listening to the second generation.

“It doesn’t matter how young or how inexperienced, they can still contribute as long as the older generation listens.”

Also speaking at the conference was British businesswoman Ruth Badger, who was the runner-up on the BBC reality show The Apprentice.