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EY Luxembourg Family Business Services

The Growth DNA of family business

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Each family business is unique, yet each successful family business has much in common. Understanding these success factors and taking advantage of that knowledge underpins what we call the “growth DNA of family business.”

EY understands what keeps you busy during the day and awake at night; we appreciate the difficulties you face trying to balance the concerns of the family and the intricacies of your business. We know what makes a family business successful.

Our ongoing in-depth research and work with companies similar to yours provides us with the basis to give you advice based on the leading practices of other successful family businesses around the world.

The EY approach is anchored in our “growth DNA of family businesses” model: our bespoke services support both the personal and company performance agenda of family business leaders, and aim to help you succeed for generations.

The growth DNA of family business 

We know that an aligned family and business strategy secures both your family’s and your company’s values on a long-term and sustainable basis — it also forms the foundation for the planning of ownership and management succession.

The practical assistance and professional advice we offer your business can help you unlock your company’s potential to enhance your business performance: the highly personalized services we offer will enable you and your family to plan successfully for the future.

The enclosed EY information sheets reflect our approach and focus on the main areas of concern for family businesses — those where we believe we can be most useful to your family and to your business.

Managing capital: capital is the lifeblood of a growing company, and many family businesses will be looking ahead and considering new investments. If you are opening new subsidiaries, taking on new staff, planning an acquisition, upgrading your technology or developing new products, you may need to consider refinancing or restructuring or to explore private or public capital injections.

Sustaining growth and profitability: to sustain growth and continue to drive profitability, you may be looking to explore new markets and broaden your product/service mix to exploit opportunities, achieve optimum returns and mitigate risk. This may involve pioneering innovative entry strategies, with any acquisitions seamlessly integrated into your business and realizing back office efficiencies that will improve top and bottom line.

Managing and retaining talent: a company is only as good as its employees; this principle applies even more in our globalized world. Increased cost-consciousness, market volatility, international assignments, tax complexities and the retention of top performers, present a whole host of challenges to family businesses.

Next generation planning: generational change in family businesses is a highly complex process and often constitutes a real balancing act for everyone involved — family, company and owner. The issues to resolve always have an emotional component in addition to practical, objective and technical aspects; alongside fiscal, financial questions, the very personal aims and values of the entrepreneur and family members will always be a major consideration.

Effective tax management: tax has a strong impact on a family company’s investment decisions, financing and liquidity situation affecting competitiveness and growth. It is therefore vital to ensure that you understand the tax implications of the business and personal wealth decisions you make.

Balancing risk: the need to be able to react quickly to market developments makes additional demands of family businesses’ flexibility and adaptability to risk. This can be achieved through forward-looking risk management combined with an effective control system that allows you to both keep your business out of trouble and improve performance simultaneously.

Future management structure: family businesses revolve tightly around the current owner — yet arranging a successor within the family may not always possible; for instance, your descendants could lack the desire and the willingness to assume the entrepreneurial risk, or they may not have the necessary qualifications and experience to manage the company. Contingency management, appointing non-family executives and family charters all contribute to ensuring your business succeeds for generations.

Culture and responsibility: customers and employees alike are attracted by a long-standing family business commitment to sustainability, whether it is an uncompromising commitment to use local products, to source from renewable resources, or to avoid using cheap labor. You may need to consider how best to integrate ethics and values into your performance strategy, and align it with the achievement of company goals with respect to growth, market positioning and optimizing internal processes such as financial and non-financial stakeholder reporting.