I am Yoshida, president of Yamada Shusei Ltd., a professional apparel garment repair group in Nagaoka City, Niigata Prefecture.
Who to entrust the business to is an important issue in business succession. In my case, I am in the process of taking over the business, but at the same time, I believe it is necessary to prepare for what to entrust next.
It is difficult to say which is better, family succession or third-party succession, but let's compare the advantages and disadvantages of each.
1) Advantages of family succession
・Strengthens family ties
・Preferential tax treatment for succession
・High continuity and stability of the business
2) Disadvantages of family succession
・There is a possibility of feuds and conflicts among relatives.
・Successors may be inadequate or unqualified.
・Innovation and competitiveness of the business may decline.
3) Advantages of Third Party Succession
・Growth opportunities such as expansion of business scale and fund-raising.
・Successors with management and leadership skills can be selected.
・Diversification and innovation of the business can be promoted.
4) Disadvantages of third-party succession
・There is a possibility of conflicts and frictions in corporate culture and management philosophy.
・Relationships with shareholders and business partners may deteriorate and trust may be lost.
・Negotiation of succession conditions and timeframe may be difficult.
According to Teikoku Databank, "family succession" remains the most common business succession in 2022, at 34.0%, the highest percentage among all categories. However, it is down 4.7% from the previous year. On the other hand, succession to employees other than blood relatives increased 2.5% to 33.9%, and succession to third parties, mainly through M&A, increased 1.7% to 20.3%, suggesting a growing trend toward de-familialization after the Corona disaster.
In any case, we will continue to examine this issue as an ongoing challenge, as it depends on management's thoughts and goals for the business, the wishes of family members and employees, and the status and future potential of the business.