Leadership

Careful succession planning key to business survival - PwC

08.12.2009
Careful succession planning has a key part to play in a firm’s survival and long-term business sustainability, particularly given the current economic climate, PricewaterhouseCoopers (PwC) has said.

The PwC Business and Wealth Breakfast today outlined how succession planning includes advance planning and having the right talent, as well ensuring tax efficient structures are put in place to ensure minimal leakage of wealth.

Speaking about his experience in running, and subsequently selling, one of Ireland's largest family businesses at the breakfast today, the Gunne Group’s Pat Gunne said: “In my experience, when running the Gunne Group, long-term business success will be determined by building and maintaining business relationships, having a real focus on cash and a clear vision for building the brand around the optimum strategy.

“In addition, having the right structures in place including strong non-executives are critical. Another key issue for success in any family business is fast-tracking succession planning. Planning for the transfer of wealth in a tax efficient manner, that it is well communicated and has the buy-in from all family members is critical,” he added.

“There are a number of important planning steps for effective succession planning. Firstly, it is hugely important that a tax-efficient will is put in place in order to avoid a tax trap. There are also a number of corporate exemptions that can be availed of in order to release wealth efficiently which should be investigated,” said Dermot Reilly, Partner, Business and Wealth Services, PwC, who was also speaking at the breakfast.

“Family partnerships should also be considered as a mechanism for efficient participation in the future growth of wealth,” he added.

According to PwC, the six key steps for efficient succession are:

Have a clear process to manage potential conflict
Agree a clear ‘family constitution’
Manage the tax
Have clear reward policy for both working and non-working family members
Have a clear and efficient sharing of wealth framework
Communicate clearly .

“In the current environment managing and protecting wealth is critical. Careful succession planning is central to this. But the one key factor determining effective succession will be ensuring that the right successor with the right talent, skills and business acumen will lead the business into the future. And careful consideration to the transfer of wealth will be critical for any business successor as well as for the business itself,” Reilly said.

Pictured at the PwC Business and Wealth breakfast are (from left): Dermot Reilly, Business and Wealth Services Partner, PwC; Paul Hennessy, Partner, PwC; Pat Gunne, MD, Green Property