Modern technologies and globalisation allow businesses to reach customers and suppliers all over the world. As a result, the traditional issues of family businesses – distributing equity fairly amongst family members, inheritance tax and succession planning – not only remain key challenges, but become increasingly complex as a family enterprise expands across borders.
Conor Blackwell, partner and family business expert, has helped many family-owned enterprises seize the opportunities offered in Ireland and says, “Like many younger, export-led economies, Ireland has been very successful at creating new sources of wealth and a lot of family businesses have benefited over the last two decades. But greater wealth brings more complexity and that can distract owners from the central task of keeping their business on track. Now that recent economic events have damaged their wealth, issues like tax become even more important. The bottom line is that owning families now have significantly more to lose.”
Conor believes the family business owner has a fine line to tread between managing the business and managing the family. “The needs of the business and the requirements of the family form parallel streams of competing pressures,” he explains. “At the same time as deciding how best to capture market share, expand overseas or build a loyal customer base, the owner may be under pressure to admit another family member into the business or to sell out altogether. Owners understandably seek to provide for their families, but the questions surrounding that can get very sensitive. Owners want to be fair, but they also know the business will suffer if management expands out of all proportion.”
The hardest challenge, in Conor’s experience, is handing control over to the next generation. “To an owner, it often seems that the business has barely reached maturity when it’s time to hand it over,” he says. “It takes real judgement to get the timing right.”