Baby boomer inaction on business succession planning means many risk leaving it too late to hand over their businesses to younger generations or to get the best future sale price for their business.
Findings from the Succession Reset: Family Business Succession in the 21st Century report, conducted by Pitcher Partners and Swinburne University, has shown that 81 per cent of baby boomers (who own a business) in Australia, and 85 per cent globally, have not completed their business succession plans.
The estimated value of these businesses in Australia is around $3.5 trillion.
The report states that succession planning needs to commence the day a business starts, whether it is family-run, small, medium, large, closely-held or privately-owned.
If this transition is not handled well, it may impact the prosperity of the many economies in which these businesses operate, said Pitcher Partners partner, Dr Richard Shrapnel GAICD.
“It could see decades of business experience lost and the competitiveness of businesses being weakened,” he said.
“Succession determines the capital value, worth, market price and value of any business and, therefore, a family’s wealth. It is key to the success and wealth of economies worldwide,” he added.
Given the fact that by 2020, a high proportion of baby boomers will have, or will be, in the process of transferring ownership of their business, succession planning is essential.
Dr Shrapnel added that as an effective succession plan could take three to five years to put into place, forward planning is critical to securing the future wealth of the family.
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