The new digital realities of today’s economy have most Canadian family business owners focused on transition, with nearly eight in 10 (78 per cent) developing a succession plan or expecting to transition the business to the ‘next gen’ within three years, according to a KPMG in Canada survey, which was released on Tuesday.
“We are seeing a demographic shift to a younger generation of family business leaders, as a result of the increased reliance on digital technology driven by the pandemic,” said Yannick Archambault, National Family Office Leader, KPMG in Canada. “Technology is dramatically shifting the way businesses need to operate and current leaders are increasingly turning to the next generation to lead going forward.
“Growing recessionary pressures may further accelerate the pace of this transition as family businesses adapt to new economic realities. Many incoming leaders bring a growth mindset. They tend to have deeper knowledge and exposure to new technologies and innovations and a willingness to integrate social and environmental issues into business planning to make their businesses more resilient and sustainable.”
Karolina Grabowska
The report revealed that a significant number of family business leaders also see opportunities for growth in a downward economic cycle. Seven in 10 (71 per cent) plan to raise capital. Nearly six in 10 (59 per cent) have plans to acquire a new business within the next three years and nearly two-thirds (64 per cent) are looking to expand outside of Canada.
“Family businesses that have a strong balance sheet, with cash on hand or access to capital, may consider making acquisitions at more favourable prices, or make the necessary investments to bolster organic growth,” said Dino Infanti, National Leader, Enterprise Tax, KPMG In Canada. “This can translate into exciting new opportunities for family businesses to leverage existing and emerging strengths in order to diversify, generate wealth and create jobs.”
Also, 26 per cent of family businesses plan to sell their business within the next three years.
“The desire to sell may reflect those ‘next gen’ leaders who are less interested in running the existing family business as they are in managing the family wealth, setting up new businesses or pursuing philanthropy,” said Infanti. “In some cases, the founder may want to sell to fund their retirement plans and to free-up family members to be enterprising in new ways.”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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