Just less than half of marine industry companies have a succession plan or exit strategy for their business.
That’s according to the latest survey of Boating Industry print and digital subscribers, conducted by email in March and April. Respondents were a mix of boat dealers, manufacturers, marina owners and others working in the industry.
The full results of the survey will appear in the May issue of Boating Industry.
While only 46 percent of readers reported having a current plan in place, that puts the industry well ahead of most family-owned small businesses. According to the 2014 Family Business Survey from PwC, only 16 percent of family firms have a succession plan in place.The succession issue can be especially challenging for family businesses, leading to a high failure rate. According to a 2012 Harvard study, 30 percent of family businesses successfully transition to a second generation. Only 12 percent make it to a third generation and just 3 percent survive to a fourth generation.
Who will buy?
Many respondents expressed concerns about who the future owners of their business will be, noting the increased cost of doing business and higher property values, especially for waterfront dealerships or marinas. There is also concern about the interest and ability of the next generation or current employees.
Of those companies that do have an exit strategy, about half are planning to transition the business to a family member or employee – 36 percent to family and 17 percent to one or more employees. Thirty-nine percent plan to sell the business to an outside buyer.
Of the companies we surveyed, 79 percent had been through an ownership transition in the last 10 years. Of those companies, 66 percent described the transition as very successful and 23 percent said it was somewhat successful. Only 11 percent said it was “neutral” or unsuccessful.
Those companies that had problems cited issues with keeping good employees and the wrong person being put in charge of the company.
Of those companies that had completed a sale, 48 percent transitioned to family members, 33 percent sold to a third-party buyer and 19 percent had employees take over ownership.