Pandemic Prompted Two-Thirds of High Net Worth Business Owners to Change Succession Plans, Clarfeld | Citizens Private Wealth Finds
‘Success and Succession’ study highlights sometimes drastic pandemic-driven changes by HNW and UHNW business owners
In its Success and Successionstudy, which explored the impacts of COVID-19 on business decision making among high- and ultra-high net worth business owners, Clarfeld found that respondents had to make tough choices. Roughly one-in-five applied for PPP loans (21%), closed branches or satellite offices (21%) and/or laid off employees (19%). Additionally, a surprising half of HNW business owners plan to sell their businesses as a result of the pandemic.
Passing the Baton
Seventy percent of respondents planned leadership changes due to the pandemic-driven challenges. In fact, 34% of respondents decided to retire early and 35% sped up their succession plans, according to the study. A clear majority, 88%, plan to leave their businesses to a family member, including spouses, children and grandchildren.
Nine in 10 business owners (89%) are confident that the next generation will be a successful steward of their business, and interest in taking over the family business is increasing among the successors. Clarfeld found that one in five children or grandchildren (21%) who were previously uninterested in succeeding their predecessors are now interested in taking over the family business post-pandemic.
“Succession planning is a hugely crucial consideration for business owners looking to provide seamless continuity – especially in a volatile period,” said
The Great Migration
In addition to the succession planning considerations, Clarfeld found that since
Further, three quarters of business owners surveyed see themselves physically moving their business in the next 3-5 years. This is underscored by the fact that 80% of business owners operated their businesses either fully remote or hybrid in-person and virtually throughout the pandemic.
“It’s no surprise to see that like many Americans, business owners have chosen to relocate as a result of the pandemic, but no decision should be made hastily,” added
Value of an Advisor
Business changes aren’t made lightly, as respondents indicated they typically consider input from business partners (23%), wealth managers (19%) and accountants (13%) before making financial decisions related to the business. Advisors are also offering insight and expertise during these trying times as a majority of respondents (59%) were proactively approached by their financial advisors around succession planning changes in light of the pandemic.
Moving forward, non-pandemic worries are keeping business owners up at night. Almost half (49%) of HNW business owners anticipate federal tax changes will have a significant impact on their businesses.
“We’re encouraged to see business owners having productive conversations with their wealth and tax advisors in the current environment, as tax policies are evolving quickly and the M&A market remains hot,” added
Clarfeld advises ultra-high-net-worth individuals, families and foundations, including many business owners, to support their complex needs.
About Clarfeld | Citizens Private Wealth
Clarfeld | Citizens Private Wealth is a leading wealth management firm and multifamily office based in
Survey Methodology: On behalf of Clarfeld | Citizens Private Wealth, Ipsos conducted an online survey between