Age of businesses and the owners leads to ownership transition - Succession Plus

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Age of businesses and the owners leads to ownership transition


Age of businesses and the owners leads to ownership transition

By , September 25, 2010

Further analysis of the data provided in the 2010 MGI family and private business survey highlights an interesting challenge for business owners – like the remainder of the population the age of the actual businesses is also increasing and approaching “retirement:”
Age of businesses %
1-24 yrs 49.1
25-49 yrs 34.5
50-74 yrs 9.1
75-99 yrs 3.0
100 and over yrs 4.3

Interestingly though retirement planning for businesses (and not just their owners) is not on the horizon, in our work with clients overwhelmingly business owners primary outcome is for the business to continue on after them ( and therefore not retire ) . Yet when the survey is analysed in more depth – the most critical issues facing family businesses – the vast majority are succession related – as would be expected as the age of the businesses and their owners is approaching “retirement:”
Communication between family members 39.7
Letting go of leadership/ownership control 39.7
Providing liquidity for family owners to exit 36.7
Securing adequate capital for growth and retirement 34.2
Choosing a suitable ownership structure for next generation 29.1
Selecting a leadership successor 25.3
Family conflict management and resolution 21.9
Developing effective processes for shared family control 13.9
Expectations of family owners not active in the business 7.6
Controlling factional orientation of family branches 2.1

This data clearly shows the lack of focus on business succession, exit planning, ownership transition planning and retirement planning has led to a large number of challenges – which combined with a rapidly approaching retirement / exit can lead to significant frustration and often an exit strategy that does not maximise business or retirement value.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.