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PWC Fbs Survey
PWC Fbs Survey
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The PricewaterhouseCoopers Family Business Survey 2007/08
*connectedthinking
Acknowledgements About PricewaterhouseCoopers
We would like to thank the family business owners who PricewaterhouseCoopers (www.pwc.com) provides industry-
participated in our survey. focused assurance, tax and advisory services to build public
trust and enhance value for its clients and their stakeholders.
We would also like to thank Caitriona Allis, Rémy Barbeault, More than 146,000 people in 150 countries across our
Lucille Chartier, Axel Dorenkamp, Colette Duff, Karen Glass, network share their thinking, experience and solutions to
Paul Hennessy, Helen Kay, Jan-Olof Lindberg, develop fresh perspectives and practical advice.
Jacques Lesieur, Bob McCullagh, Roderick Reid and
Véronique Rode-Coupeau for their active participation This publication has been prepared as a guide only. In the
in this survey. interests of brevity and clarity, detailed information may be
omitted which may be directly relevant to an individual’s or
an organisation’s circumstances. Professional advice should
be taken before acting on any information contained in this
publication. Re-publication and dissemination of the contents
(other than brief quotations with appropriate attribution) is
expressly prohibited without prior written consent.
Table of contents
Foreword 4
Introduction 6
Corporate challenges and priorities 10
Ownership, succession planning and the remuneration of senior management 24
Conflict resolution 40
The economic and regulatory changes family businesses would most like to see 48
Conclusion 52
Appendix 54
Contacts 56
Three-quarters of the family firms in our survey have expanded in the past
12 months
Many respondents are wary of growing too rapidly, but 70% are optimistic
about the immediate future and anticipate that demand for their products
or services will increase during the next 12 months
Most respondents also think that their companies are well placed to
capitalise on any new opportunities, and almost all believe that their
companies are somewhat or very competitive
8% 63%
Get a lot better 14% Increase
(Total = 16%) 68%
31% (Total = 70%)
84%
42%
Get a little better 42% 33%
(Total = 42%) 45% Remain the same 25%
(Total = 24%)
31% 15%
Stay the same 32%
(Total = 29%) 15% 5%
Decrease 4%
15% (Total = 4%)
Get a little worse 1%
8%
(Total = 9%) 7%
3% Refused/Don't know
Get a lot worse 3%
2% (Total = 2%)
(Total = 2%)
1%
1%
Refused/Don't know
2%
(Total = 2%)
1% North America Europe Emerging Markets
North America Europe Emerging Markets
Source: PricewaterhouseCoopers Family Business Survey, 2007/08 Source: PricewaterhouseCoopers Family Business Survey, 2007/08
Refused/Don't know 2%
6% Assertive/aggressive marketing
Flexibility /presentation 8%
Competitive pricing/lower cost 5% Financial strength/ability to raise capital 8%
/access to funds
Human resources 5% Consistent/can win business 5%
/customer loyalty
Assertive/aggressive marketing 4%
/presentation Technical capability 5%
Financial strength/ability to raise 4% Procurement 1%
capital/access to funds
3%
Size None 16%
Vision & strategy 3%
Other 9%
Procurement 2%
Refused/Don't know 7%
None 1%
Other 5%
Changes in
government policy, 26% Raw materials prices/ 11%
public spending 33% supply/quality issues 26%
or interest rates (Total = 23%)
37% 23%
(Total = 33%)
Reorganisation 18%
North America Europe Emerging Markets
or company-
specific issues 29%
Source: PricewaterhouseCoopers Family Business Survey, 2007/08 (Total = 28%) 30%
Yet almost half of all responding companies have no succession plan, and
the percentage is even higher in small firms or those that have been in
business for fewer than 20 years
Conversely, more than two-thirds of companies have plans for dealing with
both business and family issues, should a key manager or shareholder fall
sick or die
Don't know 4%
None 17%
Very likely 7%
Don't know 7%
71% 38%
Aware 68% Aware 29%
(Total = 67%) (Total = 28%)
60% 21%
29% 62%
Unaware Unaware
32% 71%
(Total = 33%) (Total = 72%)
40% 79%
North America Europe Emerging Markets North America Europe Emerging Markets
Source: PricewaterhouseCoopers Family Business Survey, 2007/08 Source: PricewaterhouseCoopers Family Business Survey, 2007/08
Refused/Don't know 1%
10%
Positive effect 82%
Annual bonus 9%
79%
2%
No effect 12%
17%
Deferred bonus
8% Negative effect 2%
72%
3%
Don't know 5%
19%
Options 14%
62%
Source: PricewaterhouseCoopers Family Business Survey, 2007/08
5%
14%
10% Less than 12 months
Other share plans
60% 1-2 years
16% Over 2 years
Don't know
5%
Other 0%
84%
11%
Source: PricewaterhouseCoopers Family Business Survey, 2007/08
More than one-third of the family firms in our survey have quarrelled about
future strategy, while more than one-quarter have quarrelled about the
competence of family members actively involved in the business or about
who should be allowed to work for the company
More than half also employ relatives without requiring them to compete for
their jobs on the open market
More than two-thirds of the companies in our sample do not have any
procedures for dealing with disputes between family members
Family firms combine all the Fortunately, most of the family Figure 30:
tensions of family life with those of businesses in our survey experience Although most family businesses experience relatively few conflicts, a core group of
business life, so it is hardly surprising comparatively few conflicts but, when issues are likely to cause tension
that conflicts sometimes erupt. they do, there are several issues
This is especially likely when the that generate heat. At least 20% of Discussions about the future strategy
66 25 9
management of the business is about respondents report that decisions of the business
to change hands or where ownership about who can and cannot work Performance of family members actively
73 19 8
involved in the business
has already passed to the second or in the family business, failure to
third generation. Most entrepreneurs consult with the wider family on key Decisions about who can and cannot work
74 19 7
in the business
are strong characters and enjoy a issues and the role of “in-laws” have Failure of family members actively involved in
greater degree of control than their sometimes caused strains. But it is the business to consult the wider family 77 16 7
descendants by virtue of the fact discussions about the future strategy on key issues
Decisions about the reinvestment of profits
that they set up the business in the of the business and the competence in the business versus the payment of dividends 78 15 7
first place. Moreover, as a company of family members actively involved
The setting of remuneration levels for family
matures, it is increasingly probable in the business that are most likely to members actively involved in the business 79 14 7
that some of the shareholders will not trigger a dispute. Thirty-four percent
The role “in-laws” should or should not play 79 14 7
be involved in the day-to-day running of respondents say that they have in the business
of the business – and that they may quarrelled about the future direction of Decisions about who can and cannot hold
81 13 6
periodically disagree with the way in the business, and 27% that they have shares in the business
which their relatives are managing it. quarrelled about the performance of Discussions about the basis on which shares
83 12 5
family members employed within the in the business should be valued
firm (see Figure 30). Rejection of chosen successor by other
85 10 5
family members
They would also welcome help in creating closer links with academia for
the purposes of product development, a stronger corporate compliance
environment and the provision of more state support for staff training
Their motives for running a family business – and the achievements for which
they wish to be remembered – vary hugely. Some respondents want to build
companies that will last a long time or bequeath strong businesses to their
offspring. Others love their work so much that they cannot imagine doing
anything else
own.
changed to make it The availability of additional venture capital
24 14 22 14
easier for family firms” funds to back expansion 85
Percentage of respondents
Finnish respondent Very unimportant Quite unimportant Quite important Very important
A total of 1,454 interviews were conducted between 5 February and 15 June 2007. All respondents were interviewed via a 20-minute
telephone interview, with the exception of respondents in Spain and Luxembourg, who were interviewed
face-to-face. The research was coordinated by the PricewaterhouseCoopers International Survey Unit, Belfast, our global
centre of excellence in market research, which designed the questionnaire in conjunction with family business experts from
PricewaterhouseCoopers. A separate survey was completed in India, the results of which are not included here.
1 Chris Flood, “Family companies top value league”, Ft.com (January 30, 2007).
3 PricewaterhouseCoopers has produced three previous family business surveys. The first covered family firms in Ireland
and was published in 2002. The second covered family firms in Ireland and was published in 2004. The third covered
family firms in 12 of the 27 member states of the European Union (Belgium, Cyprus, Denmark, Finland, France, Germany,
Greece, Ireland, Luxembourg, Malta, the Netherlands and Sweden) and was published in 2006.
5 “Passing on the Crown – Family Businesses and How a Family Firm can Avoid a Succession Crisis”, The Economist
(November 6, 2004).
7 Jay W. Eisenhofer and Gregg S. Levin, “Does Corporate Governance Matter to Investment Returns?” Corporate
Accountability Report, Vol. 3, No. 57 (September 23, 2005). The Bureau of National Affairs, Inc.
© 2007 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.