Family and privately-owned businesses have long been part of Ireland’s economic and social fabric, and continue to be a critical part of the Irish economy. When we think of a family business, we often imagine a more traditional business that is sometimes slower to change and often with less complex needs than their larger multinational equivalents.
In a growing number of cases this couldn’t be further from the truth, as like any other businesses, family businesses are very much focused on innovation and remaining competitive, to ensure their chances of survival for the next generation. Furthermore, they are increasingly subject to the same disruptive challenges as any other business. From the threat of cybercrime to the potential of artificial intelligence and the need to seek out new markets – family businesses have a longer list of considerations than ever before.
What also makes family businesses different is, of course, the element of family. Considerations around determining management responsibilities, corporate governance and transfer of ownership and leadership all have added layers of complexity for a business with a family at its centre. Another significant challenge that can face many Irish family businesses is their ability to attract and retain executive and managerial talent. It can be extremely difficult for family businesses to compete with public and multinational companies when bringing in external expertise. There are also unique tax considerations and implications or family businesses, particularly for transfer of ownership.
Recognising the unique nature of family businesses in Ireland, KPMG Private Enterprise has a dedicated family business practice that works with companies of all sizes to address the needs of the business, and the family.
Within this division, we have 11 advisors who have successfully completed the STEP Advanced Certificate in Advising the Family Business. The Advanced Certificate, which is subject to the rigorous quality assurance procedures of Alliance Manchester Business School (Alliance MBS), a school of the University of Manchester, focuses on providing participants with expert knowledge of the theory and practice behind the family business system.
A key milestone for our family business advisors in discussing what motivates and concerns family businesses is the annual KPMG Family Business Barometer.
Each year KPMG Private Enterprise, together with European Family Businesses (EFB), carries out research to find out more about what challenges face family businesses across Europe, including in Ireland. The findings clearly echo the idea the family businesses are indeed the ‘same, same, but different’.
The most recent report published in November 2019 showed that innovation topped the priority list for Irish family businesses, with 98 percent saying that becoming more innovative is either very or extremely important to their businesses over the next two years. Entering new geographic markets, diversification and developing their workforces’ skills are also top priorities, and likely will remain so in light of the substantial disruption caused by the global pandemic.
Findings very much unique to the family businesses are concerns over succession planning and transfer of business ownership. 88 per cent of Irish respondents indicated that they would consider relinquishing ownership of their business to be difficult because of emotional attachment, and 62 per cent of Irish respondents were concerned about the tax liability and burden that a transfer of business ownership would cause.
Our advisors combine expertise in areas from tax, corporate finance and audit, to legal services and restructuring, together with an in-depth understanding of what differentiates the family businesses.
Our team understand that the element of ‘family’ can play a significant role in decision-making and offers both opportunities and challenges, and that achieving business growth requires a fine balance between the needs of the business and the expectations of family members.
As the ambition and motivation of different generations can also be a powerful force or sometimes impediment to change, the need for external support has become hugely relevant. If you would like to elaborate further any of the issues in this article or have a family business challenge or opportunity you’d like to discuss with us, we’d be delighted to hear from you.