European Family Business Barometer: Sustaining future growth

KPMG Enterprise™

European Family Business Barometer Findings

December 2013

www.kpmgfamilybusiness.com www.europeanfamilybusinesses.eu

1 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Contents

Selected findings from the survey Page

■ What is your feeling about the economic situation of your family business over the next 6-12 months? 2

■ In the previous six months, your company has... 3

■ What are the major issues that your family business is facing right now? 4

■ Does your strategic plan include any investments or divestments? 5

■ Are you thinking about investment opportunities? 6

■ Access to finance 7

■ Importance of family issues for the business 8

■ Which of the following regulatory changes would you welcome first? 9


What is your feeling about the economic situation of your family business over the next 6-12 months?

• Confidence levels have been low across Europe during the last few years

• In contrast to many other sectors, family businesses appear confident about the future

• Key issues facing family businesses in the current market include squeeze on profitability, declining sales and administrative burden

In contrast to many other sectors, family businesses are confident about the future with 54% of respondents indicating that they have a positive outlook for their business for the next 6 – 12 months.


In the previous six months, your company has:

• 69% of respondents reported that they have increased or maintained turnover during the last six months

• Family businesses have been bucking the trend of dis-investment with over 76% of respondents increasing or maintaining the size of their workforce

• Family businesses are confident in their ability to achieve sustainable growth and have clear sight on source of growth

• 90% of respondents indicated that they have a strategic investment plan – internationalisation, diversification and continued development of core business

of respondents indicated that they anticipate growth for family business during the next six months. 85%


What are the major issues that your family business is facing right now?

• It is no surprise to see that a decline in profitability and decrease in turnover/ volume is high on the agenda for many of the family businesses surveyed

• The biggest surprise is that access to credit to finance daily operations features quite low on the list of concerns

• 11% of businesses surveyed note that this is a major issue their business is facing in the current environment

• Limited access to credit to finance investments remains a subject of concern for 17% of the respondents

• Those two figures could be a sign of confidence in respondents ability to access finance or a willingness, or acceptance, that self-funding is the route open to them

of respondents have indicated that limited access to credit to finance investments is a major issue 17%


Does your strategic plan include any investments or divestments?

• Investment continues to be high on the agenda especially in the core business

• Internationalization appears to be on the increase as 26% indicating barriers to growth outside of single market are reducing

• Investments are for a successful business in a mix of investments and divestments

The results suggest that investment in the core business continues to be the priority


Are you thinking about investment opportunities?

• Future of the family business market is expanding outside of the domestic market – 63% of respondents are considering overseas investment

• Only 23% of respondents indicated that their growth will be limited to the domestic market

• Adaptability is recognised as important to family businesses

• Some businesses don’t enter foreign markets due to lack of familiarity with the market, financing to take the first step or lack of public support

• 21% of family businesses indicated that their products or services aren’t transferrable into overseas markets

of respondents surveyed indicated that they are considering investment in other markets outside of their own country

63%


Access to finance

• Access to funding is a challenge to over half of respondents

• Majority of respondents indicated that the business has been affected by restrictions to finance leading to issues with cash management

• Challenges in accessing bank credit due to increase of guarantees needed to secure loans

• Almost 50% of respondents indicate that they still see bank financing as an attractive source of funding during next six months

• It exists a perceived reluctance by banks to fund family businesses

• Shortage of funding could represent a key risk for family businesses

Almost a quarter of the respondents have indicated that banks have no interest in financing family businesses

24%


Importance of family issues for the business

Common themes emerge including:

• Having good governance structures and processes in place – 72% ranked it as the most important factor

• Ensuring that a succession strategy is in place – 87% rated preparing and training a successor before handover as one of their top priorities

• Maintaining family control of the business – 84% of respondents see maintaining control of the family business as a key driver for success

• Communication between family members across the generations – 86%

• Ensuring that family is informed of business issues - 84%

Family businesses clearly have a clarity over what drives their success and it is interesting to note that many of these drivers are not short-term in outlook


Which of the following regulatory changes would you welcome first?

• Family businesses are making an important contribution to regional economies

• Simpler tax rules would be welcomed by 62%

• 57% of respondents indicated that they would welcome simplification of the labour market regulation including increased flexibility around employment arrangements

• Respondents indicated that people are an organisation’s biggest asset and challenge

• Governments are called upon for support with providing the right educational skills and qualifications, encouraging apprenticeships around the area of skills shortages

Only 11% and 9% respectively indicate that Government subsidies and anti-competitive behaviour legislation would make a major difference


Closing comments

• Family businesses are making an important contribution to regional economies and continue to enjoy success

• There are a number of areas that they call for

support on including with the simplification of some administrative elements including staffing

• Future success are partly reliant on their

ability to meet challenges that lie ahead • Family businesses continue to want to ‘keep

it in the family’ but have a clear understanding of the importance of the business agenda


Methodology

The European Family Business Barometer is based on the responses of an online survey, from 600 finished questionnaires which were received from EFB Members. The survey ran from July to September 2013. The survey will be conducted twice a year to measure the trends of issues facing family businesses.

The responses came from 14 European countries:

Austria Bulgaria Czech Republic Finland France Germany Greece

Hungary Ireland Italy Portugal Spain The Netherlands UK


EFB and KPMG

KPMG’s Global Family Business Centre of Excellence is designed to leverage KPMG member firms expertise on Family Businesses, enabling them to offer specialized insight to clients. This cross-border initiative aims to position KPMG member firms as leading advisors to family businesses. KPMG operates in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

European Family Businesses (EFB) is the federation of national associations representing long-term family owned enterprises, including small, medium-sized and larger companies. EFB represents 1 trillion euros in aggregated turnover, which is 9 per cent of European GDP. EFB’s mission is to press for policies that recognise the fundamental contribution of family businesses in Europe’s economy and create a level playing field when compared to other types of companies.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).

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European Family Business Barometer: Sustaining future growth

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Transcript of European Family Business Barometer: Sustaining future growth