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KPMG: Europe’s Family Businesses Optimistic, but Challenges on the Horizon

Date: 01/06/2015
Source: KPMG Romania


• 86% of respondents have a strategic investment plan, 54% indicate expansion and market share increase as priorities, while 33% plan investments abroad. 47% of family business leaders consider that their own country is the most attractive place to do business, and 30% of respondents said they do not export.
• The future of the family business is closely connected with human capital. Asked to rank by priority the policy changes that would have the strongest impact on the future success of the business, 50% of the leaders indicated the need for more flexible labour market regulations (an 11% rise compared with 6 months ago).
• 87% of the family business leaders interviewed in Europe indicated that strong corporate governance is essential to success.
• 46% of the family business leaders intend to transfer shares or the business management to the next generation in 2015.


European Family Business and KPMG have launched the third edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businesses across Europe. The survey, based on the online responses from 878 questionnaires received from family businesses across 18 European countries, including Romania, shows that the outlook for family businesses remains positive with confidence remaining stable at 70% (compared with 71% in June 2014). However, as with the 1st and 2nd edition, decline in profitability continues to be the one of the primary concerns for family businesses (cited by 47% of respondents) representing an increase of 9% over the last twelve months.

„The previous surveys gave warning signs on employment and skills. This trend seems to have continued as challenges related to the ‘war for talent’ have been steadily growing and in this 3rd edition it has been flagged as the second most important challenge for respondents (42%); a jump of 6% since the last edition in June,” said Alexandru Massaci, Director Advisory, KPMG in Romania. In addition, the ‘cost of labour’ has risen rapidly to third place in the list of challenges facing businesses, with a swing of 15% to 29% in twelve months. Consequently, it is not surprising that 50% of respondents would welcome reforms in labour market regulation.

On a positive note, our survey indicates that family businesses are still continuing to grow. 54% of respondents are now reporting that their turnover has increased (compared to 44% in June 2014). In addition, 48% of respondents have increased staff numbers in the last six months, a rise of 8% since June 2014.

„The results of this third edition show once again that family companies are growing. However, as we saw from the last edition the pressures on profitability, the worrying trend surrounding the ‘war for talent,’ and the complexity surrounding employment are still present. This should act as a signal to policy makers that urgent action is needed,” said Roger Pedder, EFB President.

As Richard Perrin, Partner Advisory, KPMG in Romania, says: „In this third Barometer it is really encouraging to see that Family Businesses are consistently optimistic about their future despite the complex economic environment in which they operate. The research has demonstrated a steady growth curve over the last six months and respondents are actively planning new investments in the coming months. Nevertheless, they are again challenged on profitability and increasingly concerned about hiring and retaining best talents. These issues will continue to be at the top of the family business agenda as we move into 2015.”

About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chisinau.

KPMG: Europe’s Family Businesses Optimistic, but Challenges on the Horizon

• 86% of respondents have a strategic investment plan, 54% indicate expansion and market share increase as priorities, while 33% plan investments abroad. 47% of family business leaders consider that their own country is the most attractive place to do business, and 30% of respondents said they do not export.
• The future of the family business is closely connected with human capital. Asked to rank by priority the policy changes that would have the strongest impact on the future success of the business, 50% of the leaders indicated the need for more flexible labour market regulations (an 11% rise compared with 6 months ago).
• 87% of the family business leaders interviewed in Europe indicated that strong corporate governance is essential to success.
• 46% of the family business leaders intend to transfer shares or the business management to the next generation in 2015.
European Family Business and KPMG have launched the third edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businesses across Europe. The survey, based on the online responses from 878 questionnaires received from family businesses across 18 European countries, including Romania, shows that the outlook for family businesses remains positive with confidence remaining stable at 70% (compared with 71% in June 2014). However, as with the 1st and 2nd edition, decline in profitability continues to be the one of the primary concerns for family businesses (cited by 47% of respondents) representing an increase of 9% over the last twelve months.
„The previous surveys gave warning signs on employment and skills. This trend seems to have continued as challenges related to the ‘war for talent’ have been steadily growing and in this 3rd edition it has been flagged as the second most important challenge for respondents (42%); a jump of 6% since the last edition in June,” said Alexandru Massaci, Director Advisory, KPMG in Romania. In addition, the ‘cost of labour’ has risen rapidly to third place in the list of challenges facing businesses, with a swing of 15% to 29% in twelve months. Consequently, it is not surprising that 50% of respondents would welcome reforms in labour market regulation.
On a positive note, our survey indicates that family businesses are still continuing to grow. 54% of respondents are now reporting that their turnover has increased (compared to 44% in June 2014). In addition, 48% of respondents have increased staff numbers in the last six months, a rise of 8% since June 2014.
„The results of this third edition show once again that family companies are growing. However, as we saw from the last edition the pressures on profitability, the worrying trend surrounding the ‘war for talent,’ and the complexity surrounding employment are still present. This should act as a signal to policy makers that urgent action is needed,” said Roger Pedder, EFB President.

As Richard Perrin, Partner Advisory, KPMG in Romania, says: „In this third Barometer it is really encouraging to see that Family Businesses are consistently optimistic about their future despite the complex economic environment in which they operate. The research has demonstrated a steady growth curve over the last six months and respondents are actively planning new investments in the coming months. Nevertheless, they are again challenged on profitability and increasingly concerned about hiring and retaining best talents. These issues will continue to be at the top of the family business agenda as we move into 2015.”

About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chisinau.

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