Family firms favour mediation to resolve conflict – PwC

SUCCESSION planning remains a constant concern for family businesses in the Midlands, according to data from PwC.

In a survey of members of its Private Business Forum, more than 80% identified the issue as crucial to their long-term success, underlining some of the unique characteristics of family businesses compared to enterprises with different ownership structures.

Along with some of the upsides of family firms – such as prudent cash control and innovative cultures – issues  such as dealing with family tensions over strategy and the role of extended family members in the business remain.

However, the international version of the research found that if UK family firms worry about these issues, their concerns pale against the strife within similar companies overseas, particularly in Japan.

Chris Romans, PwC partner and private client specialist in Birmingham said: “The research found that Japanese family firms  in particular are enduring more than their share of feuds at the moment, probably because they’re among those that have borne the worst of the recession.

“Future strategy, the role in-laws should play in the business and the failure of family members working in the business to consult the wider family are especially likely to set the sparks flying.”

Respondents in Italy and Brazil said their families quarrel about the direction of the business, while in Scandanavia, it’s the role of relatives and whether or not they should be allowed to work for the business that’s most likely to trigger dissent.

Solution vary across countrites, the survey found. Firms in the UK are more likely to seek third party help to prevent or solve disputes, but internationally, shareholders’ agreements are a favourite means to manage the issue.

Despite all the issues thrown up by the economy, the traditional concern of family businesses – succession planning – remained uppermost in the minds of most business owners. More than 80% identified the issue as criucial to the long-term success of their businesses.