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Issues affecting the succession process


Issues affecting the succession process

By , August 24, 2011

Only a reasonably small number of respondents to the 2011 Family Business Survey planned to hand on their business to the next generation – many will shortly find how difficult the succession process can be to implement – respondents were asked to rank a range of matters in terms of their likely effect on the succession process both from within and outside the family.

The research shows the big four succession issues are:
• the ability to generate adequate financial returns
• the financial capacity to retire
• trust in the abilities of the potential successor
• potential successors’ interest in the business

Interestingly, we have previously discussed the effect of the GFC and anecdotally have seen business owners hold off on an exit plan which might have been undertaken over the last three years – 29% of survey respondents listed the impact of the recent downturn as having a negative effect on the succession process.

Having reviewed the potential complexities it was not surprising that many respondents appeared to have avoided formal succession planning:

Yes Work in Progress No

Management 26 30.5 43.5
Control 23.5 28 48.5
Ownership 28.5 25.5 46

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.

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