Some interesting research here from Sun Life Asia;
A new Sun Life Asia survey reveals a pivotal moment for Asian family businesses: while most owners intend to put legacy plans in place, only 27% of those surveyed currently have a fully developed succession plan, leaving nearly three quarters of all family businesses underprepared in Asia.
This gap highlights a clear opportunity for planning and action to protect the region’s enterprises and the prosperity they create. Family businesses are the foundation of Asia’s economies, with 85% of companies in the Asia Pacific region being family-owned.
Alongside small and medium-sized enterprises (SMEs), which make up 97% of all regional businesses, the region also hosts a sizeable cohort of family-owned firms. These firms represent 18% of the world’s 500 largest family businesses, underscoring the critical role of leadership succession in preserving wealth for future generations.
David Broom, Chief Client & Distribution Officer at Sun Life, said: “A huge intergenerational wealth transfer is already underway in Asia, so it’s vital that business owners take steps now to prepare for the future and safeguard their legacies.” Succession plans are insufficient, despite legacy being a top priority Few business owners have clear succession plans in place, despite the majority showing intent in passing on wealth for their future generations.
According to the survey, while a majority (94%) of families owning a business are looking to put overarching legacy plans in place, only 27% of business owning families have a fully developed business succession plan, leaving the future of many enterprises uncertain. Another 25% have partial plans in place and 24% are still in the process of developing plans, while 19% admit they have nothing in place but intend to act someday.
Across the region, the challenge is most acute in Vietnam, where just 14% have structured succession plans compared to 39% in Indonesia, the highest among the markets surveyed. In Hong Kong, only one fifth (20%) say there are fully developed succession plans in place, and this rises slightly to 28% for respondents in Singapore.
Protection, planning and long-term growth important for families shaping their legacies
Although most lack formal succession structures, nearly seven in 10 business-owning families surveyed (69%) say having protection in place to ensure their family’s financial security is the most important factor in legacy planning. This is followed by having a clear and smoothly communicated estate plan to reduce confusion or disputes (54%) and building enough wealth to pass down to the next generation (51%). Over two-thirds prefer the wealth they leave behind to be used to fuel long-term growth, with 68% wanting their legacy invested for long-term wealth creation through financial assets, life insurance or the family business.
Broom said: “Many families are unprepared for the future, even as they acknowledge the importance of a structured succession strategy. This presents a clear opportunity for business owners to lay a strong foundation for the future, yet far too many are exposed to unnecessary risks.”
Growing generation gap leads to a succession crisis
A growing generation gap is threatening the future of Asia’s family enterprises. Many are not interested in inheriting the family business driven by a desire for independence, the fear of responsibility and shifting values. Of those active in their family business, only 40% of family business owners surveyed believe the next generation is fully willing to take over.
On the other hand, of the next generation currently not involved in family business operations, just 31% say they are fully willing to take over the business. The report indicates a sharp generational divide, with respondents reluctant to run the family business due to various reasons and priorities.
Half (50%) of family members who are not currently involved in the business and are reluctant to take over say they want to maintain their independence. Others cite the fear of responsibilities (42%), a lack of interest (28%), and different values or vision (27%) as their reasons for stepping away.
Broom said: “Asia’s family businesses are at a crossroads caused by growing generational differences. Younger generations are seeking independence, purpose and balance, and today’s business owners face a critical moment as they look to strengthen succession plans and engage in dialogue about the future.”
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