The Covid crisis has prompted many wealthy business owners to rush into retirement and accelerate succession plans, according to research by wealth manager and multi-family office Clarfeld | private wealth of citizens.
The Success and Succession study, which looked at the effects of Covid on business decision-making among high net-worth and ultra-high net-worth business owners, found that two-thirds reported that the pandemic had speeded up their plans to retire or sell their businesses. .
The July online study by Ipsos polled 150 business owners with 2,500 employees, with a net worth of about $2 million to $10 million and investable assets of more than $5 million.
The research found that due to the pandemic, 21% of wealthy business owners have applied for loans through the Paycheck Protection Program, 21% have closed branches or branch offices, 19% of laid-off employees and half of wealthy business owners intend to sell their business.
Furthermore, it found that 70% of participants planned changes in leadership due to the challenges caused by the pandemic. He also indicated that 34% of respondents retired early and 35% accelerated succession plans.
Most business owners (88%) plan to leave their business to a family member, including spouses, children, and grandchildren. The survey found that many are confident (89%) that the next generation will be a successful steward of their business.
And the next generation became more and more welcome the opportunity to continue the family business. The survey found that 21% of children or grandchildren who were previously not interested in the succession of their ancestors are now ready to take over the family business.
“Success planning is critical for business owners looking to provide seamless continuity, especially in a volatile period,” said Joan Buzek, director of trust and principal fiduciary services at Clarfeld, in a statement. “With the advice of a trusted advisor, bringing family members and potential successors to the table for these conversations ensures accountability, benefit, and ultimately a smooth transition when the time is right.”
Wealthy business owners have also had the transition on their mind as they overcome challenges. Clarfield found that as of March 2020, 65% of respondents have moved their business. Of those who made the move, 34% wanted to switch to low-tax countries, 31% wanted to be closer to family, and 27% wanted to take advantage of the flexibility that comes with remote work.
Three-quarters of respondents see themselves moving their business in the next three to five years. The survey said 80% of business owners are running their businesses either remotely or hybrid in person and throughout the Covid crisis.
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