Thai family businesses’ second generation demonstrates a higher succession rate compared to the global average, though the necessity of digital expertise remains crucial, as per insights from Kasikornbank (KBank).
KBank caters to approximately 12,000 high-net-worth individuals through its private banking services, with 90% of them engaged in family businesses, revealed Perapat Reinprayoon, the head of private banking overseeing wealth planning and non-capital markets.
Within this demographic, around 50-60% of families are actively preparing for the handover of their enterprises to the following generation, noted Perapat.
He highlighted that a notable 85-90% of KBank’s second-generation clients express intentions to assume leadership of their family businesses, a markedly higher percentage in comparison to regional counterparts like Hong Kong and Singapore, where succession rates hover around 50%.
Globally, family business succession rates have been on a decline trend, posing a survival risk for such enterprises. Data indicates a significant drop in survival rates across generations: 30% for the second generation, 12% for the third, and a mere 3% for the fourth.
Perapat emphasized that Thai family businesses are proactively gearing up for generational transitions, surging the demand for advisory services. In light of this, KBank Private Banking has rolled out a specialized service focusing on family business transformation to nurture sustainable growth and stability.
This service encompasses strategic guidance on business trajectories, operational workflows, internal governance, human resources, as well as financial and tax affairs. KBank is also engaging with a range of experts to address the unique requirements of their clientele.
The upcoming leaders of Thai family businesses predominantly seek empowerment in decision-making and enhanced professional management acumen as principal requisites for succession.
Concurrently, the first-generation leaders are looking to their successors for support in driving digital transformation initiatives.
Perapat noted a shifting mindset among the first generation of Thai family businesses, granting their children more autonomy in career choices or venturing into entrepreneurship.
Consequently, families are exploring diversified strategies to sustain their businesses, including the recruitment of professional managers alongside family members. In such scenarios, the next generation must cultivate effective shareholder skills, Perapat advised.
KBank Private Banking targets a growth of 12-15% in asset management within the family business segment and aims for a 17% expansion in the coming years.
