At 51, Steve Parfett is a long way from retirement. He intends to remain at the helm of the eponymous C&C business set up by his father for years to come. Yet Parfett has commissioned a study to look at ownership options when he does depart. The reason? Like a growing band of entrepreneurs he is already facing up to the fact his family business is unlikely to pass to the next generation.

The difficulties of finding a suitable successor to a modern family-run business have been highlighted by the long-running saga of Sir Ken Morrison's retirement.

By the time Sir Ian Gibson steps into his shoes as chairman next March, it will be two years since Sir Ken gave up the day-to-day running of the company.

For the 75-year-old, moving away from a business that bears his name has been difficult, understandable considering it was founded by his father William in 1899. But it is a warning note to an industry blessed with many family businesses - from retailers Booths and Proudfoot to C&Cs Parfetts and Wing Yip and manufacturers Baxters, Jordans and Warburtons - that keeping a business under long term family control is increasingly difficult.

Ian Greaves, partner at KPMG, points the finger at changes in society. "Historically, going in to a business was a way of extending the family line," he says. "If you go back 40 years, if mum and dad ran a family business, they would expect their children to join."

Fast forward to today, and only a third of family businesses make it to the second generation, and just one in 10 make it to the third (Grant Thornton).

"Society is more open, and going to university gives children a taste of the outside world," says Greaves. "They won't necessarily want to follow in their parents' footsteps. There are fewer family businesses as a result."

This has had a two-fold impact. Owners have to look further afield for suitable people to take over, and succession planning has to start much earlier.

"Effective planning can take years to come to fruition so it is essential the owner has a clear vision of where they want the business to go," says Greaves. "Neglecting the issue can jeopardise the future and security of the business and the family."

Hence Parfett's decision to start planning now. He realises there is a growing likelihood that no family member will be in a position to take on his Stockport-based C&C company. Two of his three children have previously worked for the business but have since left because of the pressures of working with family.

Children are spending longer in education and taking gap years, which means by the time their parents want to retire they won't have the necessary experience to take the reins, he adds.

"In the past they would have joined the business at 18 or 19 and worked their way up, but now they are joining much later. When I want to retire it is unlikely that any children will have the degree of experience required to make a contribution at board level."

As a business grows, the problem becomes even more acute - bigger business needs greater experience. This may cause a dilemma for Warburtons, one of the biggest family-owned food and drink companies in the UK. The company, founded in 1876, is in its fifth generation, but chairman Jonathan Warburton agrees a question mark hangs over how much further down the family line it will pass.

"The business is in a different place from a generation ago in terms of focus and scale," says Warburton, who still has another five years or so before he intends thinking about succession planning. "There is a huge responsibility. It would be wrong to employ somebody of the wrong calibre or who is too young.

"The role I have may never be fulfilled again by a family member so it may be better to let a professional run it with the family having an ambassadorial role."

All very well, but anyone telling a son or daughter they are not going to get the keys to the empire could expect a few arguments over the dinner table.

This is where mediators come in. "In any decision-making process I would urge [owners] to separate issues that relate to the business from the 'family'," says Howard Hackney, head of family business at Grant Thornton.

Even once you have identified your successor - family member or not - comes the tricky decision of how to sign off.

"Do you linger in the background to oversee the new appointments or make a quick break?" says Greaves.

"Having spent your lifetime building a business, it isn't that easy to let go."

Giving up control can also have an impact on both the pocket and the ego. "I always encourage clients to think through carefully the impact of giving up both management and shareholding control upon their financial wellbeing and whether they are prepared to accept the next generation is likely to take decisions they will disagree with," says Hackney.

Accepting that life - and business - goes on without you may be the best answer. "I am confident any new owner will do the business justice," says Parfett.

"We only got where we are today thanks to our staff and this will continue without us."nSuccession tips

Start early: Five years is a sensible timeframe

Plan meticulously: there are times when a gradual withdrawal is preferable, but sometimes a clean break avoids suspicion of meddling

Involve the family: Presenting family members with a fait accompli is not a good idea

Be realistic: No matter how much you want to keep it in the family, the next generation may not be right

Get help: If you're going to sell up, get expert advice to assist.

Source: Grant Thorntonretailer, supplier, wholesaler

Morrisons



Chairman Sir Ken Morrison plans to stand down in March. But it has been a drawn-out process. After handing over the day-to-day running of the Bradford-based supermarket last June to new CEO Marc Bolland, it took until July this year to find a successor in his role as chairman. Sir Ian Gibson will initially operate as deputy chairman.But the future of Sir Ken's shares is less certain.























Patak's



After a bitter inheritance feud over founder Lakmishanker's Patak's curry sauce and chutney business, Kirit handed over £8m to his younger sisters. This year Kirit and wife Meena settled the company's succession by selling the company to ABF for an estimated £100m - but Kirit, Meena and their three children will continue to work in the business, as it piggybacks ABF's distribution network.



Parfetts



Steve Parfett has been managing director of this family-owned business since 1989, when his father and Parfetts' founder Alan retired. His brother Robert is also on the board, but trading director Bill Pace became only the second non-family director in 2003. With no obvious successor since his children left Parfett is now examining options.

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