Family Businesses in Asia Face Succession Planning Challenges

Lack of Succession Planning Raises Concerns

A recent survey conducted by Sun Life Asia has revealed that a significant majority of family businesses in Asia are unprepared for succession. The survey found that 73% of family businesses lack formal succession plans, with only 27% having comprehensive arrangements in place. This gap exists despite 94% of family business owners expressing their intention to implement comprehensive legacy planning.

The Significance of Family Businesses in Asia

Family businesses form the backbone of Asia's economy, constituting 85% of companies in the Asia Pacific region. These businesses, alongside Small and Medium Enterprises (SMEs) that make up 97% of businesses in the region, play a crucial role in the economic landscape. Notably, Asia is home to a substantial number of large-scale family businesses, representing 18% of the world's 500 largest family businesses.

Implications of Inadequate Succession Planning

The lack of proper succession planning poses significant risks to the continuity and sustainability of family businesses. With a substantial intergenerational wealth transfer currently underway in Asia, the need for business owners to prepare for the future has never been more critical. Effective succession planning is essential not only for preserving family wealth but also for maintaining business continuity and ensuring the long-term success of these enterprises.

Key Findings and Observations

• 85% of Asia Pacific companies are family-owned
• 94% of family business owners plan for legacy
• Only 27% have fully structured succession plans
• Family businesses represent 18% of global top 500 family businesses

The survey highlights an urgent need for family business owners to prioritize succession planning to safeguard their legacy and ensure business continuity across generations.