Maybe the kids aren't interested, or the parent doesn't want them to lead the family empire. Whatever the reason, there are times when a family needs an exit from the business they have built.
PwC's family business expert Ng Siew Quan told CNBC that about a third of Asian family business owners were considering selling the company because they could not find a successor or felt that a sale was a better solution than handing the businesses to their children.
The number of families in Asia looking to sell was higher that the average of family businesses polled globally - which came in at about 20 per cent - in the 2014 survey, most likely due to shorter corporate lineages in Asia, Ng added.
And although there was an emotional attachment to family-run firms, numerous examples from Europe showed that letting go of a business at the right time could be beneficial, he said.
"People get too hung up about businesses not being passed onto next generation," Ng said.
"So long as wealth and value gets passed on to the next generation, that's good enough. There's no point being hung up on a business that's no longer relevant in today's world...What's important is that you accumulate wealth, you grow the wealth, and with the wealth, you do better things and most importantly you pass on the values from generation to generation."
There are three main exit options for family business owners, according to PwC's Ng and National University of Singapore's business school professor David Reed.
Sell the business
- IPO: A float could kick off a diversification of ownership, as well as helping to professionalize the company through the set-up of a formal board and management team.
- Selling to private equity or venture capitalists: If an IPO was too complex due a family business'scomplicated ownership structure, a private sale to a private equity firm could be an option. Private equity and venture capital investors could help restructure the firm, or even permit the family to buy the firm back once a suitable successor had been groomed. Getting professional management could also help iron out sticky family politics.
- Allowing a management buyout: If non-family managers already work in the business, a management buyout could ensure the continuity of the business, while allowing the family to exit. A benefit would be that the managers and employees would be familiar with the business, making for a smoother transition process than an outright sale.
- Seek out a merger or acquisition: Merging or being acquired by another family business could leverage on the strength of both firms.
- Liquidate the business: If there were no better value-creating options and the owners were desperate to exit, the experts said closing the business was a route to consider.
Let professional managers take over
Bringing in external professionals to run the business while family members took a backseat could allow the owners to retain control most of the company's shares and hold board seats to ensure continuity of direction.
Adopt an heir
Adopting an heir has been the solution for Japanese businesses with no suitable successors in the family. Although a single heir could be adopted, this method of succession planning was usually done through marriage as male heirs were preferred.
The practice, which dates back centuries, has spawned a matchmaking industry dedicated to finding new family members qualified to take on the family business.
Osamu Suzuki, who is the current chairman of Suzuki Motor Company, is, for example, the fourth adopted son to run car maker, due to the lack of male heirs. He married into the family through a union with the founder's granddaughter and adopted the family name.