Keeping it in the family is important for family businesses but new research* from Investec Wealth & Investment shows they are also keeping their options open.

The independent study of the £595 billion UK family business sector**  which employs around 13.9 million people found around one in three (33%) large family businesses are considering selling to outsiders as part of their exit plan.

The most popular route is a sale to private investors such as private equity or venture capital which is preferred by 17% while 9% are considering a trade sale and 7% are looking to become publicly listed through an IPO.

However, the research by Investec Wealth & Investment, which is part of Rathbones Group PLC, with family businesses which have an average annual turnover of £7.81 million, found a strong commitment to keeping the business in the family. Around 37% of family businesses which have exit plans intend to pass the business on to the next generation.

More than four out of five (82%) questioned expect the next generation of the family to take over running the business when the current generation in charge of the firm step down. Around 86% are confident the next generation want to run the business and 91% are confident they will make a success of running the business.

The study for the UK’s leading discretionary wealth manager found family-run businesses are very much focused on succession planning. Almost all (94%) say they have an expert valuation of their business and 87% say they have a robust succession plan in place which sets out how to split profits and defines the size of stakes held by the owners.

More than two out of five (41%) say the succession plan is reviewed every year while 53% say it is reviewed every two years. Nearly half (48%) admit they either don’t or don’t know whether they have an exit plan in place.

Nadine Collins, Financial Planning Director at Investec Wealth & Investment (UK) said: “Succession planning is a crucial question at family-run businesses.   Various reliefs and structures do exist that allow families to pass business assets down the generations in a tax-efficient manner. A full exit from a family-run business could result in an increase to an individual’s estate above available allowances and being subject to inheritance tax where professional advice is not sought.

“It is encouraging that so many family-run businesses have robust succession plans in place and take such a professional approach to having valuations of their business. An important part we can play with those selling their business is to understand how the proceeds can meet their own financial needs beyond the sale. Selling a business comes with differing priorities and emotions, often life after the exit can be at the bottom of a long list, when it should be given higher significance.

“The role of professional advisers in supporting family-run businesses is absolutely crucial as families can benefit from advice on their own finances, as well as protecting the assets that have been established over many years for the benefit of future generations.

As one of the UK’s leading discretionary wealth managers companies, Investec Wealth & Management, part of Rathbones Group PLC, focuses on a relationship-based approach to Financial Planning and Investment Management, with the purpose of making a tangible and meaningful difference to clients and their families. 

-Ends-

Notes to Editors

1. * Investec Wealth & Investment commissioned the market research company Pureprofile to interview 100 family members involved in the running of their family business during October 2023. All family businesses questioned had annual turnover of more than £1 million and the total annual turnover of businesses involved in the study was £718 million. The businesses operate in a range of sectors including advertising, automotive, financial services, computer software, education, Government services, healthcare, insurance, legal services, manufacturing, property, retail and wholesale trade, aviation, engineering and utilities.

2. ** The contribution of family businesses to local communities in the UK - House of Commons Library

For more information, please contact:

Investec Wealth & Investment (UK)

Anita Turland

07769 682373

anita.turland@investec.co.uk

Perception A

Phil Anderson

07767 491519

phil@perceptiona.com

 
About Investec Wealth & Investment (UK)

As one of the UK’s leading wealth management firms, we are trusted with managing £40.7 billion (as at 31 March 2023) of our clients’ money. Our wealth teams work hard at providing Out of the Ordinary levels of service to our clients and with an investment heritage dating back to 1827, we’re built for the long term.

Investec Wealth & Investment (UK) is a trading name of Investec Wealth & Investment Limited which is a subsidiary of Rathbones Group Plc. Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is registered in England. Registered No. 2122340. Registered Office: 30 Gresham Street. London. EC2V 7QN. Member firm of the London Stock Exchange.

Investec Wealth & Investment (UK) is a trading name of Investec Wealth & Investment Limited which is a subsidiary of Rathbones Group Plc. Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is registered in England. Registered No. 2122340. Registered Office: 30 Gresham Street. London. EC2V 7QN.