Although a quarter of UK family businesses are expected to change hands within the next five years, only half have a succession plan in place, a new report claims.

Accountants PricewaterhouseCoopers (PwC) said the leaders of 28 per cent of family-run companies will change by 2012, 44 per cent of which will pass to the next generation.

But despite the predictions of such important business events, just 55 per cent had drawn up a formal succession process outlining what will happen when the current boss quits or retires. Even more worrying was the 30 per cent who admitted they had not even picked a successor.

Paul George, partner and family business specialist at PwC, said: “Passing the family business onto the next generation can be difficult; often every bit as challenging as a third party sale.

“The survey results suggest that many are not facing up to the tough personal choices involved. There is sadly a long history of great family businesses which have failed as a result of sleepwalking into a succession process.”