european family business barometer: a more confident outlook (3rd edition)
DESCRIPTION
In the 3rd bi-annual European Family Business Barometer, we bring insight into the confidence levels of family businesses across Europe. While the outlook is positive, the pressure on profitability and the war for talent are key challenges.TRANSCRIPT
Third edition
European Family
Business
Barometer
A more confident outlook
December 2014
www.kpmg.com/familybusiness
1 © 2014 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
■ Confidence: How do you feel about the economic situation of your family businesses for the next six months? 2
■ Confidence: In the previous six months you company has… 3
■ Challenges and concerns: What are the major issues facing your family business right now? 4
■ Investment strategy: Does your strategic plan include any investments or divestments? 5
■ Investment strategy: Are you thinking about investment opportunities? And if so where? 6
■ Internationalization: Why doesn’t your family business sell to foreign markets? 7
■ Access to finance: In the last six months, has your family business experienced difficulties in accessing finance? 8
■ Financing: Which of the following options do you consider the most attractive in the next six months? 9
■ Regulatory environment: What changes/improvements would you welcome most? 10
■ The future for family business: What would you consider to be the top five key strengths of your business? 11
■ The future for family business: Importance of family issues for the business 12
■ Family business strategy: Are you considering any options for your family business over the next 12 months? 13
2 © 2014 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.
Confidence
Family businesses are consistently confident about the future
70% indicate a positive outlook for the next six months
(up from 54% in December 2013)
25% are neutral about their economic prospects (4% increase since June 2014)
Only 5% are negative (a drop from 12% one year ago)
As a result – family businesses are increasingly ready to make new investments.
How do you feel about the economic situation of your family
business for the next six months?
3 © 2014 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.
In the previous six months your company has:
Confidence
54% have increased turnover (up from 44% in June 2014)
48% have increased staff numbers (up from 40% in June 2014)
72% of respondents are engaged in activities abroad
Businesses are more cautious about international expansion and
focus on maintaining operations on foreign markets
(a rise from 32% to 44% in six months)
4 © 2014 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.
Challenges and Concerns
What are the major issues facing your family business right now?
Decline in profitability - 47% of respondents; cited as major
concern twice in a row (+ 9% over a year)
War for talent - 42%, rising up to the second most important
challenge (up from 23% in a year)
Cost of labor has risen from 15% one year ago to 29% now
Though there is a drop in political uncertainties (from 33% to
27%) and regulatory changes (from 36% to 26%) in the last
six months, businesses still want to operate in a stable and
predictable regulatory environment
5 © 2014 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.
Investment Strategy
Does your strategic plan include any investments or
divestments?
86% of respondents are planning new investments as part of
their strategic plan (75% in June 2014, 79% in December 2013)
Core business is a top investment priority (54%)
Investments in internationalization slightly but steadily decline
(a drop to 25% from 27% six months ago, and 29% a year ago)
Decrease of investments in internationalization may alter the
balance between domestic markets versus foreign markets in the
future.
6 © 2014 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.
Are you thinking about investment opportunities?
Investment Strategy
86% of respondents are considering future investments
47% of respondents prioritize investment in their own country
20% plan to focus on European markets
Neighbouring markets mseem less risky due to their proximity and familiarity
Only one third associate their success with other overseas markets
7 © 2014 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.
Internationalization
Why doesn’t your family business sell to foreign markets?
Respondents have slightly increased activities abroad (from 60% to 63% in six month)
Still 37% do not sell abroad
34% among them explain: their products/services cannot be sold externally
24% among them consider domestic business to be sufficient
The question is: Are the given reasons for not exporting valid or are companies not willing
to make the effort to expand in new markets?
8 © 2014 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.
Access to Finance
Access to finance can be a key issue and growth inhibitor
Positive outlook: 80% have had no difficulties with funding in the last
six months – significant improvement from one year ago (49%)
Only 20% (compared to 51% in December 2013) still experience difficulties
Of those struggling to access finance, 35% note that underfunding can
make it difficult to commit to new investments in the future
In the last six months, has your family business experienced difficulties in accessing finance?
9 © 2014 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.
Financing
Which of the following options do you consider the
most attractive in the next six months?
75% of respondents use traditional sources of finance, like …
Bank financing (47%)
Own equity (28%)
Family Business try to balance financing needs with the reluctance to
relinquish control and desire for privacy, so…
Possible solution: to shift attention to other less traditional not less
attractive sources of external financing*
*Topic is developed further in KPMG Global Family Business Survey ‘Family matters:
Financing Family Business growth through individual investors’, September 2014
10 © 2014 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.
Regulatory Environment
What changes/improvements would you welcome most?
Future success of Family Businesses is
directly linked to human capital
Mostly welcomed are regulatory reforms to
support the recruitment of the skilled staff
(from 39% to 50% in six months)
49% wait for the reduction of administrative
burden
Demands for simpler tax rules and for benign
tax and administrative arrangements of inter-
generational family business transfers have
decreased (from 52% to 42%, and 45% to
37% respectively over six months)
11 © 2014 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 Future for Family Business
What would you consider to be the top 5 key strengths of your
business?
Respondents attribute much of success of their companies to
their unique characteristics:
Ability to take quick decisions – up from 34% to 46% in a year
Private ownership – up from 10% to 41% in a year
Long-term perspective – up from 32% to 38% in a year
A customer stays in focus for family businesses:
48% indicate ability to win business or customer loyalty
45% focus on customer service
12 © 2014 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.
Importance of family issues for the business
Family businesses are driven by a series of critical
success factors; among the most important:
Good governance structure and processes in place
(87%)
Ability of family business leaders to prepare and
train their successor (82%)
Maintaining family control over business (81%)
Other growing trends: financial literacy amongst family
members and philanthropic activities
The Future for Family Business
13 © 2014 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.
Family Business Strategy
Are you considering any options for your family
business over the next 12 months?
Family Businesses develop their business plans for the
coming year – 50% will undertake strategic changes
The major steps are:
Passing the management to the next generation
(24%)
Appointment of a non-family CEO but retaining
family ownership/control (23%) -– an alternative
route that many companies consider in relation to
succession
Passing the ownership of the business to the next
generation (22%)
14 © 2014 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.
Methodology
The European Family Business Barometer is based on the results of an online survey. In total 878 completed questionnaires were
received during the period 15 September to 20 October 2014.
This is the third survey of its kind to be conducted measuring trends among family businesses.
The responses from the following countries have been analysed:
Austria
Belgium
Bulgaria
Cyprus
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Malta
Poland
Portugal
Romania
Spain
The Netherlands
UK
15 © 2014 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.
Country contacts
EUROPE
Christophe Bernard
Partner, Global Head of
Family Business
T: +33 (0) 1 5568 9020
AUSTRIA
Yann-Georg Hansa
Partner, KPMG
T: +43 (0) 1 3133 2446
Peter Humer
Partner, KPMG
T: + 43 (0) 732 6938 2212
BELGIUM
Thomas Zwaenepoel
Partner, KPMG
T: +32 2 708 38 61
BULGARIA
Kalin Hadjidimov
Partner, KPMG
T: +359 (0)2 969 7700
CYPRUS
Demetris Vakis
Partner, KPMG
T: +357 22 209 000
FINLAND
Ari Engblom
Partner, KPMG
T: +358 (0) 20 760 3614
FRANCE
Jacky Lintignat
Partner, KPMG
T: +33 (0) 1 5568 9036
GERMANY
Dr. Christoph Kneip
Partner, KPMG
T: +49 (0) 211 475 7345
GREECE
Christian Thomas
Partner, KPMG
T: +30 21 11 815 815
HUNGARY
Zoltán Mádi-Szabó
Senior Manager, KPMG
T: +36 1 88 77 331
IRELAND
Colin O’Brien
Partner, KPMG
T: +353 (0) 1 410 1679
Olivia Lynch
Partner, KPMG
T: +353 (0) 1 410 1735
ITALY
Gianluca Geminiani
Partner, KPMG
T: +39 071 290 1140
MALTA
Anthony Pace
Partner, KPMG
T: +35 6 2563 1137
THE NETHERLANDS
Olaf Leurs
Partner, KPMG Meijburg & Co
T: +31 (0) 76 523 7514
Ernst Groenteman
Partner, KPMG
T: +31 (0) 20 656 7482
POLAND
Miroslaw Grabarek
Partner, KPMG
T: +48 22 528 1091
PORTUGAL
Vitor Ribeirinho
Partner, KPMG
T: +351 21 011 0161
ROMANIA
Richard Perrin
Partner, KPMG
T: +40 37 237 7792
SPAIN
Juan Jose Cano Ferrer
Partner, KPMG
T: +34 914 563 818
UK
Gary Deans
Partner, KPMG
T: +44 (0) 141 300 5811
Thank you
To download the third EFB-KPMG European
Family Business Barometer – A more
confident outlook, please click here.
© 2014 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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