Adapting to Uncertainty: Succession, Investment and Market Timing

Common challenges in passing the torch

Succession planning remains a critical challenge for many businesses, particularly those in the mid-market and family-owned sectors. According to Yeo, starting the process too late is one of the most common mistakes. "A lot of business owners run the business for a little too long and, by the time they start thinking about succession, the business is already past its growth stage and on the downward trend," he explains.

Another recurring issue is failing to identify successors early on. "They get to a point where they want to hand the reins over to someone, and there’s no one there," Ben says, highlighting the lack of leadership development and middle management within many businesses. This challenge is compounded in family businesses, where family dynamics can complicate the process. Passive shareholders often voice their opinions during critical transitions, which can delay or derail the process.

Yeo also emphasized the risks of overlooking external talent. "There’s a lot of great talent outside the family or existing business network," he says. This lack of perspective often results in missed opportunities for growth and innovation. Additionally, reliance on a single leader or knowledge base within a business can create vulnerabilities, especially during transitions.

To mitigate these challenges, Yeo recommends a phased approach to succession planning. "Start with a vision and a plan. Regularly set meetings to review and update that plan, and involve key stakeholders from the beginning," he advises. This ensures alignment and minimizes surprises. Leadership development and external advisory support are also crucial. "Identify key people within the business and assess their skills. If necessary, bring in external advisors or upskill existing staff to prepare them for leadership roles."

Succession and restructuring for family-owned businesses

Family businesses face unique considerations when deciding between internal family succession and external leadership. "It’s often a skill-based decision," Yeo notes. “‘Product’ or ‘brand’ based roles might be best kept within the internal pool of talent, because they often understand the vision for the company and the perspective of the customer. Whereas if a business has plateaued, bringing external talent into the more technical business units like finance and operations can especially help refine processes and drive a second wave of growth," he says.

In some cases, restructuring or splitting the business into independent units can make sense, particularly for larger family enterprises. "If one part of the business is growing in a different direction, creating multiple business units with dedicated teams can improve efficiency and focus," Benjamin explained. He also advised structuring businesses as though they were preparing for an (initial public offering) IPO. "Having good governance, reporting, and a clear organizational structure sets the stage for any future transaction, whether it’s a sale, merger or public listing."

When evaluating private equity (PE) versus strategic investment, family businesses must weigh the implications carefully. "Private equity often requires founders to remain involved for an extended period, which can be a difficult transition for someone used to running their own business," Yeo says. Strategic investors, on the other hand, offer synergies and sector expertise but can pose a higher risk of losing the business’s unique identity. "Engaging experienced advisors is critical to ensure the goodwill and brand value of the business are preserved."

Weighing up PE vs. Strategic Investors

Yeo outlined key differences between private equity and strategic investors, emphasizing that each option comes with its own risks and rewards. "Private equity often seeks to consolidate sectors, which can mean less risk of losing a business’s identity if it’s the first acquisition in a roll-up strategy," he says. However, the cultural shift required for a founder to work within a private equity structure can be significant.

Strategic investors, on the other hand, may present opportunities for synergies, such as cost reductions and increased market presence. "When you find a complementary business, merging can create a much greater value in the market," Yeo explains. However, he cautioned that misalignment of goals or strategies could lead to challenges. "Clear communication upfront is essential to define the goodwill component and ensure both parties are aligned," he advises.

Timing decisions in economic uncertainty

In today’s volatile economic environment, timing is critical for any capital event. Yeo stressed the importance of preparation. "It’s never a good idea to just think of a sale one day and act on it the next. Every business should have a clear strategy for growth, liquidity, or divestment that spans two to five years," he says.

For mid-market businesses assessing their industry’s growth potential, Yeo recommends performing a mix of internal and external research. "Speak to people within the business and the broader market. There’s no better way to understand your position than by getting real-world feedback," he says. Advisors can also provide valuable insights through market analysis and informal conversations with industry players.

Yeo predicts a strong M&A market in the next 12–24 months, though he notes that the ongoing trade war has introduced slower deal timelines and heightened risk aversion. "We’re seeing businesses de-risking, consolidating and increasing margins through smart M&A activity, with a preference for sector stability and revenue predictability," he observes. The strongest mid-market M&A activity is expected to come from Asia-Pacific (excluding China) and India, driven by capital inflows and digital acceleration. Meanwhile, Australia remains a stable market with above-average deal flow, particularly in sectors tied to demographics, such as aging, and professional services.