Business and financial advisor Grant Thornton is warning South Yorkshire businesses to carry out adequate planning well ahead of changes in ownership, after research found less than half make formal plans before changing hands.
Grant Thornton’s International Business Report found that 27 per cent of businesses will change ownership at least once in the next ten years. Despite this, only half of these businesses will have a formal succession plan in place.
The report also found that many privately held businesses find themselves making succession-related decisions under pressure, rather than planning in advance.
Jonathan Griffin, partner and head of tax in Sheffield, says this may explain the fact that 30 per cent of private enterprises survive into the second generation and only 12 per cent survive into the third.
He said: “Succession planning can allow businesses to transfer ownership without suffering financial or tax consequences and we would strongly advise any business to make plans before any changes in management.
“A succession plan provides businesses with a safety net, and this is vital to bring stability to the company in what can otherwise be a difficult time. Formal planning can also reassure potential buyers over the stability of the company and without detailed plans many investors will be put off.
“In our personal lives we do not hesitate to plan our finances for the future, but for some reason when it comes to business we do not always do the same.”