Socio-emotional wealth key to keeping business in the family: KPMG

Latest family business research from KPMG shows that business families with high socio-emotional wealth are more likely to keep control of the business within the family.

Additionally, the report found that financial success of a family business is a contributor to socio-emotional wealth.

KPMG enterprise partner Dominic Pelligana said if current and future family business leaders were not aligned on issues of market opportunities and outlook, family socio-emotional wealth could be affected.

"This lack of alignment can cause the business to become distracted and start to lose its competitive edge, and the family starts to lose its love for the business," Pelligana said.

KPMG's report also said family communication was central to socio-emotional wealth, highlighting the survey found those families who openly discuss business information are better equipped to identify and promote the development of potential successors.

The survey found 29% of family businesses had no succession plan from current to future leaders in place, but added this usually occurred because the current leader was under the age of 55. About 8% planned to sell their business, and had no reason to create a succession plan, while 63% had either a leadership transition or succession strategy in mind.

Also, 60% of current leaders surveyed plan to pass on the leadership of their business to another family member, while 34% will allow the family to relinquish control of the business.

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