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Supporting family enterprises deep in DNA of KPMG

Supporting family enterprises deep in DNA of KPMG

Supporting family enterprises deep in DNA of KPMG

A passion for private enterprise and family owned businesses has always underpinned the DNA of KPMG and its dedication to meeting the needs of small and medium enterprises dates back to the very inception of the firm.

“Through changed times where the world of business has evolved beyond all recognition, our commitment to family business has been unwavering,” says Michael Lynch, Partner with KPMG Private Enterprise. “We never forget that family businesses form the backbone of the Irish economy, our business is their business in every way, and we never forget that.”

Family businesses account for over 40% of all private sector employment in Ireland, and KPMG Private Enterprise has a long and proven history of working with family businesses of all sizes across in all industries from inception through to maturity. “Whether it is in the area of audit and assurance, tax, advisory or general family business matters, our clients will always be aware that KPMG is always there to help, just a phone call away.” 

Maintaining longevity, growth & profitability

While KPMG is often associated with large enterprises operating globally which have become listed companies such as Elan, Ryanair and Fyffes, Michael Lynch underlines the fact that KPMG are proud to have worked with many of these businesses throughout their evolution, from when they were established as a family owned business and subsequently developed to become the listed enterprise they are today! 

“We’re passionate about bringing our knowledge and experience to our clients to ensure they create and navigate a strategic road map to sustained growth and success. A family business is typically highly ambitious, driven by the desire to create a lasting legacy and leave it in a better state for the next generation. But when you balance that with the conscious or subconscious desire for financial security for the family now and in the future, to keep the business in the family - there can be an inherent conflict between longevity versus growth and profitability.”

Family businesses are unique. In addition to the matters relevant to running a family business they also need to manage the myriad of external challenges, including Brexit, currency fluctuations, the need for overseas expansion, a changing tax landscape, talent retention, and the need to innovate, diversify and embrace technology and the digital age.

Managing succession & governance

Research indicates that only 30% of Irish family businesses are expected to survive the first generation. Succession planning and governance have often been the main areas of consideration for family business owners.

According to Michael Lynch, “Maintaining a strong spirit of entrepreneurship as the business matures and then evolves through its various stages of development is key. We see our role working with and asking the right questions for the business and the family, so a tailored and complementary business plan focused on governance and succession can be formulated.”

KPMG work with clients to manage these competing objectives and balance the running of the business in accordance with the needs of the business, as well as factoring in the needs of the family.

Irish family businesses confident for 2019

According to the most recent KPMG European Family Business Barometer, Irish family businesses have had a strong year of growth in 2018 and are positioning themselves for further growth over the next 12 months. This, combined with a relatively favourable economic environment, has helped to spur a positive outlook for the future, with 79 percent indicating a confident or very confident outlook for their prospects over the coming year. In addition, a majority of family businesses reported significantly increased turnover over the past year, in keeping with a similar sentiment amongst their counterparts across the EU.

Innovation is top of the agenda for many family businesses, with the survey seeing an increasing focus on driving innovation. Family businesses are rising to the innovation challenge, actively monitoring signals of change and streamlining decision making.

Beyond operational challenges, Brexit continues to be top of the business agenda, particularly in Ireland and the UK. Reflecting Brexit related concerns and a desire to move into new markets, 38 percent of Irish respondents increased their activities abroad in the last year.

Insights from Irish family leaders

At the recent KPMG gathering of Irish Family Business Leaders in Cork’s Crawford Gallery, principals from Flahavans, HC21, the Healy Group and Ballymaloe shared their practical experiences and lessons learned over generations of managing both the business and family aspects of the business. Moderated by Colin O’Brien, former KPMG partner, the lively discussion threw up a number of interesting observations on how best to maintain the family dynamic, while moulding it into the management and governance demands of business in 2019.

  • There are no absolute rights or wrongs to addressing succession matters. Family business often confound conventional wisdom.  
  • You can’t chain people to a business just because of its name.
  • The next generation should consider working outside the business in their early years, learn from elsewhere and establish their own identities.
  • Family businesses usually begin around the kitchen table, but they grow at a boardroom table with non-family members as part of the team.
  • Hire managers to provide the talent in certain areas unavailable within the family and respect their opinion and experience.
  • When a family business grows beyond a certain point, it will need to reach outside for skills sets it does not have.
  • Managers coming into family businesses should ask: ‘What do you want me to do?’ They should then be let get on with the job.
  • You may love your job and still come into the office after retirement, age is not a barrier to entrepreneurship.
  • Increasing average life expectancy is causing challenges for family businesses. One such example revolves around existing tax law which encourages ownership to pass before the owner reaches 66 years of age.
  • Family business can be all consuming, it is important to make time for the other things that matter in life.

This article first appeared in The Examiner, and is published here with their kind permission.

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