Latest research from the 2011 Family Business Survey - Succession Plus

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Latest research from the 2011 Family Business Survey


Latest research from the 2011 Family Business Survey

By , August 18, 2011

The latest annual survey prepared by FBA and KPMG has been released and has some interesting findings on Family Business and succession issues :
Just a little over 60% of all survey respondents highlighted retaining family control of the business is either a high or very high priority for them at the present time. Several other succession related issues also rated highly including preparing and training successors before succession actually takes place, selecting a successor, selecting family members for positions in the business and dealing with rivalry among potential successors in the family.

In terms of major reported causes of conflict in family businesses – future strategy, competence of family members working in the business and succession issues accounted for 44% of all reported conflict causes. Over 31% of respondents reported they had no formal mechanisms in place to resolve family business conflicts.

One area of considerable concern were the arrangements in place to manage the family/business interface – 65% of respondents said they had no succession plan for the CEO, 72% also said they had no succession plan for other senior positions held by family members and almost exactly half had no estate plan (wills ) for other family members with a stake in the business.
In terms of a possible exit strategy for the business a moderate number of respondents intended passing the business on to the next generation, interestingly this prospect became twice as likely in the long-term. Some form of sale of the business outside the family was the overwhelmingly popular exit strategy and implementation of any exit strategy at all was also three times more likely in the long term at 55% in the short term at just 16%.

Consideration of exit strategies Short term Medium term Long Term
(12 months ) ( 3 years ) 5+ years

Sale of business to a competitor/trade sale 50.5 42.0 33.5
Passing the business to the next generation 12.5 17.0 23.5
Appointment of a nonfamily CEO 12.0 11.5 10.0
Sale to a private equity consortium 9.0 8.5 7.5
Sale to current employees 7.5 8.5 10.0
Venture capital 3.0 4.5 4.0
Sale to another family member 3.0 5.5 6.0
Initial public offering (listing) 2.5 2.0 5.0
Other – 0.5 0.5

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.