Many Singapore family businesses unprepared for succession; some prefer to sell: HSBC

[SINGAPORE] Many family-owned companies in Singapore are not fully prepared to pass on the business to the next generation, an inaugural HSBC report released on Wednesday (May 14) has said.

In fact, selling the business is becoming a preferred option, the report said.

While 81 per cent of Singapore’s entrepreneurs would like to keep their business in the family to preserve their legacy, 55 per cent have not prepared a concrete plan for leadership transition.

This gap is even more pronounced in other parts of Asia, HSBC noted.

“In particular, we found that roughly two-thirds of respondents from mainland China, Hong Kong and Taiwan have not planned for how their businesses might continue after them. It is a state of affairs that seems likely to not only damage family harmony over the short-term, but also jeopardise its wealth and business affairs over the longer one,” said the bank.

Globally, while 78 per cent of entrepreneurs express the desire to pass on their business, 52 per cent have not taken steps to plan for that.

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The findings are based on a survey of 1,798 high-net-worth business owners with at least US$2 million in investable assets. These owners come from mainland China, France, Hong Kong, Taiwan, India, Singapore, Switzerland, the UAE, UK and US.

HSBC’s findings underscore a looming leadership vacuum, especially as Asia prepares for the transfer of an estimated US$5.8 trillion in intergenerational wealth by 2030, with the region rapidly creating billionaires.

“Rising financial wealth does not make discussions about business succession any easier. It can have the opposite effect,” the report said. “For what can be a sensitive topic for any family, is likely to be far harder if the first and second generations have experienced radically different lives, thanks to their country’s rapid economic transformation.”

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Succession versus selling: A shifting mindset

Although succession remains the preferred route, selling the business has become a viable option.

Business owners in mainland China, Hong Kong, Taiwan – and to a lesser extent, Singapore – show the most interest in selling, out of the 10 markets surveyed.

The sector most favoured for sale globally is electronics (21 per cent); the least favoured are food and beverage and manufacturing (both 6 per cent).

For entrepreneurs in Asia, Single Family Offices (SFO) are also growing in popularity as the end destination for sales proceeds.

They enable families to professionalise investing in their wealth, and for the next generation, to diversify it into varied industries through direct investments, private equity and allocations to other asset classes, said HSBC.

The sector is booming in both Hong Kong and Singapore; at the beginning of 2025, Singapore had 2,000 SFOs, up from 400 in 2020.

Why succession is more complex in Asia

While entrepreneurs in Asia have benefited from the region’s recent and rapid economic rise, they have less experience in managing wealth, the report said.

“Economies have radically changed in the space of just one generation, forging different expectations among the second generation in the process,” the HSBC report said. “On top of this, all companies face a more globalised world, in which geopolitics, international trade and competition are in flux.”

Generational flexibility

Despite wanting and trusting the next generation to carry on the family business, many entrepreneurs in Asia recognise their children may have different aspirations and a significant proportion are open to them exploring what they want.

In Singapore, 43 per cent of entrepreneurs want their children to be able to carve out their own path.

Edith Ang, HSBC’s head of family advisory, said: “Asian entrepreneurs and their families can better prepare for the future by embracing a dynamic, forward-thinking approach to extending business longevity and protecting wealth.

“This can maximise the smoothness of eventual transitions. It does not have to be a decision to keep the business in the family or sell and formalise the wealth through a single family office. Sometimes the optimal solution could be a blend of the two.”