Feuds threaten family ventures, says report

Nearly a third of Kenyan family businesses lack mechanisms to deal with conflicts, posing a threat to their existence, an auditing firm’s study shows.

The research by PricewaterhouseCoopers (PwC) also shows that although 55 per cent of these firms have succession plans for some senior roles, only 23 per cent have sufficient and documented plans.

“The finding was insightful because lack of a formal conflict resolution mechanism is a challenge that can destroy the value of the business,” PwC country and regional senior partner Anne Eriksson said.

The survey was conducted between April and July this year on 62 family businesses in Kenya with a sales turnover of between $5 million and $500 million.

It is the first time the auditing firm has carried out the survey in the country. Globally, PwC has been conducting similar studies every two years since 2002.

The respondents were from manufacturing, retail, transport, agriculture and hospitality sectors.

Nakumatt Holdings, Keroche Breweries, Bidco Oil Refineries and Mount Kenya University are among the institutions surveyed.

The report comes at a time when courts are dealing with conflicts emerging from family businesses which have resulted in the closure of some, and low productivity levels among others.

WITHDRAW INTENTION TO BUY

A recent case in which three brothers were involved in a battle for the control of Naivas Supermarkets was closed last Friday.

The family feud saw South African retail giant Massmart withdraw its intention of acquiring a 51 per cent stake in Naivas.

PwC estimates that family-owned businesses account for 70 per cent of the global gross domestic product.

According to the report, about 61 per cent of such ventures consider attracting and retaining employees in the next one year a major challenge due to competition from multinationals.