The best legacy any business owner can leave is not simply the company they built, but ensuring it has every opportunity to thrive long after they have stepped aside
Giles Thorley.
There is a key moment in the life of every successful business that receives far less attention than it deserves.
It is not the day the company is founded or wins its biggest contract. It is the day an owner begins to ask: what happens next; what happens after me? For thousands of business owners across Wales, that question needs to be addressed sooner than they realise.
Despite succession planning being one of the most important decisions any business owner can make, the reality is that it remains one of the least discussed.
This matters because succession is about far more than an individual wishing to retire. It is about protecting jobs, preserving local ownership, holding on to talent and ensuring that successful Welsh businesses retain their goodwill while continuing to contribute to their local communities.
Economic Intelligence Wales (EIW) has just published an important new report on business succession planning. The report, Small Business Ownership Succession Planning Strategies, written by Mark Lang, Max Munday, Annette Roberts, and Neil Roche of the Welsh Economy Research Unit at Cardiff Business School, pulls together independent academic research with practical economic insight.
It certainly gives us pause for thought. Welsh research referenced in the report found that only 16% of SMEs had considered succession planning, while almost half of family-owned businesses had no formal succession plan. It reinforces what we encounter every week when meeting business owners across Wales: succession planning is underdeveloped. That should concern all of us.
These are not simply statistics. They represent businesses employing local people, buying from local suppliers and acting as an economic backbone in their local communities. If succession is left until it’s urgent, the consequences can be significant. Good businesses can lose value, investment decisions are delayed, skilled employees become uncertain, local supply chains suffer. Sometimes, the solution at an exit or retirement by the founder is simply to close the business. Others leave Wales, taking jobs, decision-making and economic value with them.
Opportunity in change
That is why I believe succession planning should be viewed as an opportunity. Handled well, ownership transition can provide fresh leadership, unlock new investment and create a platform for further growth. It allows businesses to retain their identity and provides the opportunity to potentially pursue new markets while owners can realise the value of their hard work over the years.
Over the past decade, the Development Bank has supported many types of succession: family businesses passing to the next generation; management teams stepping forward to buy businesses they helped build; employees becoming owners through employee ownership trusts. Each route is different, but the outcome is the same: businesses remaining rooted in Wales.
We’ve supported 379 succession transactions with more than £157m in funding. Behind those figures are hundreds of individual stories. For example, Design & Supply in Merthyr Tydfil recently completed its second management buy-out (MBO), ensuring a successful manufacturing business remains locally owned and safeguarding 65 jobs.
Cardiff-based 1st Choice Accident Repair Centre has entered a new chapter through a second MBO after we funded the original MBO in 2018. At Lloyd & Gravell, employee ownership has given the workforce a direct stake in the company’s future. DRAC Consulting has implemented a family succession plan supported by investment that enables continuity.
Where to start
Each business is different – and each solution is different. But they all demonstrate that with the right advice, planning and finance, ownership transitions can strengthen businesses rather than simply preserve them. The challenge is that many owners do not know where to begin.
Running a business leaves little time to think about an event that may still feel years away. Succession planning can seem complicated, involving legal, tax, financial and personal considerations all at once. It is no surprise that many owners postpone those conversations.
But that is why one of the report’s most compelling recommendations is the creation of a clearer, more visible support offering for business succession in Wales. Owners should not have to navigate a maze of organisations and advisers. Whether their best option is family succession, a MBO, employee ownership or a trade sale, businesses should be able to access guidance and finance earlier.
This is about more than individual businesses. It is about the future shape of the Welsh economy.
We talk about productivity, innovation and entrepreneurship. Yet one of the greatest economic opportunities already exists within the businesses that we already have and that are already here. Helping Welsh firms transition smoothly to the next generation of ownership protects jobs, retains wealth locally and gives communities confidence.
Not every business will stay independent forever. Nor should it. But where viable Welsh businesses can remain in Welsh ownership, supported by local leadership and local decision-making, the economic and social benefits are substantial.
Business succession may never generate the headlines of a start-up or a major inward investment announcement. But if we want a resilient Welsh economy built on strong local businesses, it deserves to be treated as one of the most important economic conversations we have.
The best legacy any business owner can leave is not simply the company they built, but ensuring it has every opportunity to thrive long after they have stepped aside and are enjoying the fruits of the risks they took and all that hard work.
