Family firms are increasingly being sold or bought-out rather than being passed down through family lines, a survey has revealed.
Of 650 small businesses surveyed by accountancy firm, Haines Watts, only 16 per cent said they planned to pass the business on to another family member. It highlighted the increasing preference of entrepreneurs to cash in their business efforts at the end of their careers, taking advantage of increasingly better business values.
William Townrow, from wealth management experts Vestra Wealth, said, "People will pay good money for businesses, so more people are happy to cash in and fund a venture by their son or daughter rather than pass their business down the family line.”
Around 100,000 businesses are thought to leave family control each year due to a lack of succession plans or business pressures. The BDO Guide to Family Business has found that only 24 per cent of UK family businesses survive through to the second generation, falling to 14 per cent through the third.
Some industry insiders predict, however, that a rise in capital gains tax (CGT) could change this.
Jamie Shepherd, of investment services firm, Courtiers, said this situation had been created by low CGT - which encouraged people to sell – but that "if plans to raise it to as much as 50 per cent go through, there could well be a lot less."
