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Succession Planning – The Current Position

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Succession Planning – The Current Position

By , January 22, 2009
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There is much literature on succession planning, with most of it focusing on the mechanics of the “transaction” and looking at various aspects of what is generally a complicated and multidiscipline strategic issue for business owners. Gersick et al ( 1997 ) remark “Succession is not one thing but many. It is not a single event but a process.” In the realm of family owned businesses (FOB) much work has been done in terms of the different issues facing FOBs as they approach succession and the varying outcomes as a result.

Ip and Jacobs (2003) maintain “Successful succession results in a continuation of the business at least in the short term” – LeBreton-Miller, Miller and Steier( 2004) define the successful outcome of succession as “the subsequent positive performance of the firm and the ultimate viability of the business.” This is one of the keys to why business succession planning is such a low priority for business owners as this suggests the mechanics of the transaction are in fact not a large determinant of the success or otherwise of the outcome.

Smyrnios and Walker (2003) report that 82 percent of Australian Family Businesses identify  succession is an important issue. At the same time 83 per cent of Australian Family Businesses do not have a succession plan in pace for the CEO (Glassop et al 2008).The dramatic disconnect between intent / perceived value and implementation needs further examination and a framework for removing the barriers to succession faced by business owners needs further work as this market is extremely valuable – the estimated value of business cessations in Australia was 3.7 % of GDP or approximately $17.6 B.

KPMG / Deakin 2008 Survey
Primary reason for not having a succession plan:
No likely successor identified                        36 %
Too early to plan                                                 27 %
Selecting a successor is too difficult              8 %
Other reason                                                         29 %

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.