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KPMG’s head of family business makes New Year predictions

Jan 08
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KPMG’s head of family business makes New Year...

Tom McGinness, head of family business at KPMG, has set out the areas he’s expecting to be top priorities going forward into 2021.

The first of these is for everyone within a business to ensure they are all contributing to a shared purpose. Such a move is particularly important in a post-Covid business world as strong connections are being made between clarity of purpose and the commercial performance of an organisation.

Secondly, tax is likely to be on the mind of those heading up family businesses, as changes are being proposed to both inheritance tax and capital gains tax. Add this to a possible wealth tax to be unveiled in the Spring Budget in March and effective succession planning becomes an almost impossibility.

Diversification is expected to be a huge trend in 2021, as many businesses move into different areas to mitigate risk and ensure there’s wealth to pass on to future generations of the family.

Attracting and retaining staff is an issue that has been well-documented in family businesses in recent years, but the added pressures of the pandemic have made addressing it all the more urgent.

Environmental, social and corporate governance (ESG) is important to younger generations, KPMG has been told by many of its clients and this has been backed up with research. As these family members take on more prominent roles within businesses, they are ensuring their practices align with these beliefs.

The challenges faced by many family businesses over the past year will lead to increased scrutiny of governance structures. Potentially strained family relationships will require concerted efforts to communicate, make decisions and solve problems.

Resilience is connected to governance, but looks more specifically at how these structures manage risk. According to Mr McGinness, employing multiple governance tools could be the best way for family businesses to support all the members of each generation.

A move towards systems and data, which has been seen in recent years, is likely to gain momentum throughout 2021. It will help with everything from strategic planning to managing liquidity as companies turn to reliable information to aid in commercial decision making during uncertain times.

Mr McGinness spoke of the shift in mindset that is becoming evident. He said: “I see increasing evidence that families are thinking more about future opportunities than present concerns. There’s an exciting degree of planning their business of the future, from new markets to new products or new processes, often with digital transformation at its heart.”

Finally, more advisors are expected to be deployed as businesses look outside of the family for guidance amid a rapidly changing environment. The trend reflects a need to move away from traditional practices in a bid to adjust to new ways of working.

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