43% of family firms have no succession plan – PwC research

A Pricewaterhouse Coopers (PwC) research has indicated that 43 percent of family businesses and firms in the country do not have succession plans in place, with just about 12 percent of the total making it as a third generation business.

PwC maintains that succession planning in private and family businesses is a critical process that ensures continuity and sustainability of the business across generations.

Speaking at a PwC Family Business Succession Planning Seminar in Accra, an Assurance Partner of PwC Ghana, Edward Gomado, said it is important for private and family businesses to have succession plans, emergency plans and exit plans.

According to him, a succession plan is not a fall-back plan for when things go wrong, but a comprehensive plan with well-integrated considerations to ensure continuity of operations and avert or withstand future threats to the business.

He however explained that exit plans are also critical to deal with non-performance which leads to business collapse.

“A business may have planned to bring someone to succeed existing managers. But when the person comes and fails to perform, there must be a plan to exit such persons. And such persons must be made to willingly exit the business based on performance,” Mr. Gomado said.

In emergency cases, Mr Gomado said, there must be a plan in place to deal with such situations, adding: “Life happens, things may happen suddenly; death may come in a wink. So every family business or firm must have an emergency plan to deal with such events”.

Following the sudden disruption to businesses as a result of COVID-19, PwC noted it was dismayed to realise only a handful of businesses have succession plans.

The PwC Global Family Business Survey 2021 findings revealed only 30 percent of businesses globally said they had some robust, documented and communicated succession plan in place, and this represents an increase from 15 percent in 2018.

Dr. Gomado appealed for family and private businesses to leverage expertise provided by PwC in order to put their organisations on the right footing.

Managing Director-Nyaho Medical Centre, Dr. Elikem Tamaklo – who was guest-speaker at the forum, shared challenges and success stories on how Nyaho Medical Centre was able to put the right mechanisms and succession structures in place through the PwC.

“Any future-looking family or private firm should be talking about succession planning. You should plan who’ll succeed you, management and the entire leadership, and resolutely consider current trends including the positives of competitors,” Dr. Tamakloe advised.

PwC maintains that companies struggle with other challenges – including sustainability, regulatory compliance and corporate governance structures.