The CII-KPMG report also emphasized the importance of succession planning. “Effective succession planning is a critical factor for the longevity of family businesses. The report reveals that while 80-85% of all incorporated businesses in India are family-owned, only 14% make it to the third generation, and a mere 5% to the fourth. This highlights the need for structured and formal succession plans to preserve family legacies,” the report said.

Nilesh Mody, Partner, M&A and Family Office, KPMG in India, remarked, “The successful transition of family businesses to the next generation is crucial for sustaining economic growth in Kerala. Our report highlights the importance of structured mentorship, effective succession planning, and professional governance in fostering a new era of business leadership. We are committed to supporting these families as they navigate this transformative journey.”

The report also delves into challenges faced during leadership transitions, such as perceived disinterest from the next generation and the senior generation’s reluctance to step back. It explores the benefits of involving external professionals to facilitate smooth transitions and enhance business operations.

Addressing potential conflicts is essential for maintaining family harmony and business stability. The report outlines various techniques for conflict resolution, from mutual discussions to external mediation, ensuring long-term business success.