This is evident from research on ownership and ownership in family businesses conducted by the Maastricht University Center for Entrepreneurship and Innovation (CEI), in collaboration with BDO. BDO annually examines the dynamics in and around family businesses.
Ownership requires more than ever
For 41% of (potential, current, or former) owners of family businesses, adequate preparation for ownership is lacking. They mainly prepare themselves and experience a (too) limited role of the family. Topics that are insufficiently addressed in the preparation include personal development, business strategy, preparation for entrepreneurship/dealing with failure, and financial knowledge and skills. It is striking that so many owners consider their preparation inadequate, as good ownership can make or break a family business. The demands for ownership are increasing, partly due to expanding families, business transfers with little attention to the psychological aspects of family businesses, and stricter governance standards. This calls for professional ownership with specific competencies to fulfill the role of owner. Three types of competencies emerge from the research: matching competencies (referring to recognizing and utilizing valuable combinations of resources), governance competencies (related to value creation through effective governance and a suitable organizational structure), and timing competencies (concerning making strategic choices at the right moment). An owner does not automatically possess these skills simply by working in the family business but requires training or education.
The research also shows a clear difference between preparation for working IN the family business and ownership: education and work experience are generally focused on the operational role, not on ownership and the associated responsibility. Family statutes often lack clarity on what education or competencies are needed to become (actively or passively) an owner.
A paradox is that nearly two-thirds (61%) of owners in the family business rate themselves as good (responsible and competent) owners. Responsible ownership, along with continuity, is the top priority for owners, while financial goals such as profit optimization or securing wealth for the family score lower.
Governance is crucial for continuity
In more than half of family businesses (54%), a form of formal family governance is lacking. This governance is essential to prevent conflicts within the family. Both active and passive ownership carry the risk that relationships within a family become strained. The research shows that as family businesses grow, the level of family governance increases.
Properly structuring responsibilities around ownership is essential for both the continuity and success of a family business, says Professor Dr. Anita van Gils, Scientific Director CEI. "It is more important than ever. Many family businesses are growing, just like the family itself. Without professionally structured family governance, the risk of misunderstandings and tensions in the family significantly increases. If a business has been in the hands of the same family for generations, there can be many branches in the family ownership tree. Who should remain involved with the business and in what way? What choice do you make regarding ownership of successors not working in the family business? How do you set up the dividend policy? These kinds of questions call for a strategy around ownership and the structuring of family governance. Clearly articulate what ownership means within the family, both for active and passive owners, and what expectations and competencies are associated with it.
More than a fiscal action
Thanks to arrangements such as the Business Succession Scheme (BOR), ownership of family businesses can be transferred tax-efficiently. The research emphasizes that transfer is much more than a fiscal action. Some respondents had received certificates without the family discussing this with them beforehand. Machiel Gosschalk, Partner and family business specialist at BDO Netherlands: "Ownership is truly a governance issue that requires development and conscious choices. Many businesses are still too operationally focused and pay insufficient attention to their family governance. Ownership goes beyond tax optimization and requires conscious choices, good agreements, and a solid governance foundation. We see that the complexity in family businesses is increasing. Thus, professional ownership is no longer a luxury but a necessity. Timely investment in governance, clearly defining and documenting roles, and adequately preparing owners for their role strengthens family relationships and thereby the future of their business.
