An investigation into succession planning of family businesses in the Midlands.
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Family businesses are a significant contributor to the Irish economy and succession planning has been stressed in the literature as one of the most pressing issues that challenges their continuity among generations. The purpose of this research is to examine the levels of succession planning among family businesses in the midland regions of Ireland. As part of this research, the considerations involved in developing a succession plan for a family business will be examined. The research will also identify the awareness of succession planning among family businesses and the levels of family businesses that plan their succession. It will address the reasons why businesses are refusing to plan, and the also the reasons why the businesses that are engaging in succession planning are doing so. Finally, the research will assess if the current economic recession has had any effect on the level of planning among family businesses. The author used a survey strategy by employing the use of questionnaires and semi structured interviews. Questionnaires were sent to one hundred and ten family businesses in the midland counties of Ireland: Laois, Longford, Offaly and Westmeath, achieving a response rate of 22%. Semi structured interviews were conducted with various professionals who have been involved in different aspects of the succession planning process: an accountant, a tax consultant, a succession planning facilitator and a managing director of a family business who had recently taken over the business from his father. The findings revealed that most of the family businesses would like the business to remain within the family, but only a fraction have actually planned their succession, Due to the perception of succession planning not being an immediate issue, the findings revealed that succession planning does not rank highly in the priorities of owners of family businesses. The participants who have planned their succession were mainly owners who were in the process of retiring. Therefore, it appears from the findings that people will not contemplate their succession unless they are getting ready to retire from the business. Most owners also stated the recession has had no effect on their succession plans, however most were also unaware of the financial benefits of transferring their business during a recession. It was found that most people are unaware of the effect of the recession on their plans as they are too focused on keeping the business viable. Succession planning is an important issue for those who want the business to be passed onto the next generation, and something that should be planned in advance rather than when fate forces them to do. There are a lot of issues to be considered, but taking the time to consider these issues can help save a lot of time, money and conflict. The author hopes that this research will help family businesses understand the issue of succession planning and hopefully result in greater levels of succession planning in the future.
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