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Family business challenges differ between the US and Europe

The challenges facing family businesses not only differ between emerging and western markets, but even within each of these markets, according to a family business expert.
Family businesses in the US and Europe face different challenges, says expert

The challenges facing family businesses not only differ between emerging and western markets, but even within each of these markets, according to a family business expert.

Jörg Ritter, co-head of the family business advisory division of executive search firm Egon Zehnder International, said that despite operating in similar developed markets, family businesses in Europe and the US have to deal with very different issues that affect their success.

Ritter, who recently led a survey among family business owners and executives from the Americas, Asia-Pacific and Europe, said the US's large population means that American family businesses can afford to focus on their national market.

This contrasts strongly with Europe, where companies are "forced to internationalise their business and go global at a much earlier stage as their national markets are too small to survive".

Remaining a family business is a key challenge for American companies that want to expand to new markets, said Rittersaid.

"Once competitive forces make international expansion necessary, [US families] are likely to sell their business or let in private equity investors rather than grow internationally on their own," he told CampdenFB.

Improving corporate governance is another issue which US families face. American businesses are less keen on giving senior positions to non-family members than their European counterparts, he said, and, as a result, “their governance structures are in many cases less professional”.

In emerging markets, Ritter said succession planning is a big challenge.

“Many family businesses in emerging markets are first generation and currently dealing with the challenge of transitioning into the next generation – or the question of whether they even want to continue their business,” he said, adding that the firms that “want to transition need to be able to grow beyond their own local markets”. 

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