Business families of significant wealth are reviewing the implications of Brexit as the scheduled date for Britain’s withdrawal from the European Union looms.
PwC has been urging clients to start activating contingency plans in areas where Brexit may affect supply chains and cross-border change. For the sector as whole, many organisations were still waiting to see what the final outcome of negotiations will be before taking significant investment decisions, Peter Englisch (pictured above), global and EMEA family business leader at PwC Germany, said.
“We should remember that the family business sector is incredibly diverse: spanning many different industries and sectors with different exposure to Brexit risk,” Englisch said.
“Certainly it will be influencing decisions for European family businesses about whether to continue to invest or operate a base in the UK, but we are yet to see any signs of capital flight.
“As with many aspects of Brexit, and even at this late stage, it is still too early to tell what the short and long term impacts to overseas investment in the UK will be.”
Uncertainty around Brexit had certainly unsettled business owners and managers, Tim Sarson, partner and Brexit tax and location lead at KPMG, said. Not only because of the potential economic fallout of no-deal, but also because of the general feeling of political volatility and the question mark hanging over Britain’s place in the world.
“It is sensible for businesses to take any no-regrets actions they can to protect against the worst, while trying to keep a long term perspective on the opportunities here,” Sarson said.
Paul Westall (pictured left), director of family office recruiters Agreus, said it has been “business as usual” for the vast majority of family office clients in the UK. Agreus had also seen a number of new family offices established in the UK since the referendum on 23 June, 2016 although they had largely been set-up by Middle East families.
“Our European family office clients tend to have a very global exposure and already have structures and investments across global jurisdictions,” Westall said.
“The reason for having their family office in the UK was based on a number of factors. These vary depending on the family, but as an overview have been based on access to deals and a sophisticated investment market, access to high calibre human capital, for education of their children and personal enjoyment of living in the UK—London mainly—and the lifestyle it has to offer—culture, entertainment etc.”
Most families devised a Plan A and a Plan B for major events in their lives, such as succession and divorce, a family consultant who requested anonymity, said.
Principals will consider political upheavals including the UK’s departure from the EU as one of those events to contend with.
British family principals were discussing the implications of Brexit with external trusted advisers as part of their regular consultations, but most were not actively looking to move their bases to an EU jurisdiction, the consultant said.
Asked if UK business families are applying for second passports for themselves to maintain access to Europe, Englisch said: “I am sure many family businesses—as well as individual families in general—are considering such arrangements. Yet we must remember that what defines many family businesses, which has been highlighted in PwC's recent Global Family Business Survey, is their sense of legacy.
“Family business owners are rooted in their connection to generational legacy across their own families, of course, but also their local community. There are 12 million people employed by family business in the UK. The ability of family businesses to make long-term business decisions, as well as often make individual sacrifices in terms of salary cuts, enabled many of them to weather the storm of the financial crisis.”
Englisch said PwC's advice for all companies concerned about Brexit was to make sure they were fully aware of their potential exposure to risk, and seek arrangements which were appropriate for business continuity.