Whether your business is law, construction, manufacturing, retail, or government contracting, and you require exit planning, asset protection, or a tax planning solution, our business has been "solving clients' problems" since 1977.

If you’re like most family business owners, you want to protect your business and ensure that it stays in the family, but you’re not doing enough to safeguard its future.

About 78% of respondents to PwC’s 2023 Family Business Survey say that their business is their family’s most important asset, and 72% want to ensure the business stays in the family. And why wouldn’t you? Chances are you’ve significantly sacrificed to get to where you are today, and you’d love for the next generation to take what you’ve built and run with it when the time is right.

But year after year, the survey reveals that intentions and actions regarding family succession planning don’t always align. Sadly, most family businesses do not have a strong, documented, and communicated succession plan. Many don’t even have critical documents in place. These include shareholder agreements, family employment policies, entry and exit provisions, dividend policies, emergency and contingency procedures, and conflict resolution mechanisms. In fact, only 64% of family business leaders have the most fundamental asset-protection document in place: a last will.

If you recognize that you’re missing some of these critical documents, take steps now to remedy it. It’s incredibly difficult to save a family business after the founder’s death, in particular, when many of these documents are absent.

It also pays to communicate both about these bigger-picture plans and day-to-day concerns. Only 49% of PwC’s respondents said their family aligns on the company’s direction. About 65% say they invest time in understanding family members’ concerns, and 57% say they define clear expectations for family members. That leaves a gaping hole where mistrust and misunderstanding can fester.

“There is a correlation between trust, communication and performance. Our survey shows that respondents who have higher levels of trust report fewer conflicts, and those who have agreed values written down report higher levels of growth in the past 12 months,” the study authors write.

We often tell clients that exit planning and succession planning are similar. Whether you plan to sell the business to an outside buyer or employees or intend to pass it down to family, preparing the business for that transition takes years. Here’s why: Protecting assets through a transition takes a combination of tax minimization strategies, business financial planning, estate planning, industry comparisons, and sometimes restructuring of the business and even forensic accounting to uncover mysteries that could derail future moves.

All of this takes time and thoughtful consideration. And if you’re doing it for the benefit of your heirs, it’s essential to include them early on so that they understand the reasons behind the decisions you make.

One final asset protection note: We noticed a focus on cybersecurity as part of the survey this year. What does cybersecurity have to do with family business succession? Accenture has found that nearly 43% of cyberattacks are on small and medium businesses, including family businesses. Those attacks can cost family businesses hundreds of thousands of dollars. A longstanding statistic is a scary reminder of how serious it can be: 60% of companies go out of business following a significant cyberattack. That’s why the IRS considers cyberattacks one of the biggest threats against small businesses.

Going back to PwC data, just 40% of respondents say they are very advanced in effectively responding to and addressing data/privacy breaches. It’s a reminder that asset protection isn’t what it used to be. Emerging outside threats and opportunities can make or break your succession plans in an instant. Doing “what we’ve always done” is rarely the best answer. Feel free to contact us with questions.

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