Australian family businesses are facing a looming challenge and opportunity as baby boomers hold off their retirement, creating a potential intergenerational transfer of wealth worth $3-4 trillion over the next decade.

"100% of owners will leave their businesses whether planned or otherwise."

According to Family Business Australia¹ about 67% of total businesses, 55% of total private-sector employment, and 48% of total private-sector wages in Australia are family-owned or controlled. However, only 3% of businesses in Australia reach a fourth generation and 70% of wealth transfers to the next generation fail, while the failure rate for second to third generation transfers and beyond is above 90%.

• 91% of owners who exit their business have no exit experience
• 75% of business transitions did not go to plan
• 61% of owners could not get a good price, find a buyer or the right buyer
• 24% of owners said advance planning would have made their exist easier²

Trent Daly, Private Wealth Adviser at Shadforth, Luke Mountford, Partner at HopgoodGanim Lawyers, and Murray Howlett, Partner at Pilot Partners, held a roundtable event on Thursday, 27 April with an exclusive audience to discuss the state of the M&A market in South-East Queensland.

The group discussed rising interest rates and other factors that may affect the valuation, timing, and other conditions ’on which business owners may be able to sell their business.'

They also covered pre-sale preparation, such as when to start mentally and mechanically planning for succession or exit, getting ready to sell from a business and personal financial planning perspective, and how to conduct due diligence to avoid surprises or disputes.

Lastly, they explored post-sale outcomes including case studies and stories of scenarios and consequences, as well as examples of an ideal outcome.  All of which involved getting the right advice early and following and implementing that advice.

According to research by the National Australia Bank², 75% of business transitions do not go to plan, and 24% of research participants stated that advanced planning would have made their exit easier. However, 100% of business owners will, at some point, exit their business, whether planned or otherwise, and the key is to be prepared for it and seek professional advice.

If you have any questions, please contact Steven Parry

1. KPMG Australia and University of Adelaide Family Business Report (2021) - Transition Diversity and Entrepreneurship.p.2