Is your family business ready for handover?
With the Baby Boomers slowly moving into retirement, family-owned businesses in Australia are facing an intergenerational transfer of ownership, the biggest seen in Australian history. A study by KPMG found that 50% of Australian family-owned businesses intended parting ways through a generational business handover, whilst also noting that 61.54% of those surveyed acknowledged that their leadership styles were very different. As well as this, 2/3 of every family owned business with a Baby Boomer CEO intend to change ownership in the next five years. However, a 2013 study found that only 1/3 of these businesses actually deem themselves to be ready for this generational handover.
It is important that businesses start planning for succession as soon as they can. It is recommended that planning for 5 to 10 years should be completed in order to fully prepare for the transition between leaders. This will account for the differences in leadership styles between the generations, as well as conflicting family views in regards to how the business should operate.
Due to an increased life expectancy, some Baby Boomer CEO’s are reluctant to step out of the business completely after the generational handover has taken place. They may still be overly controlling the business which can cause a number of problems within the business. Communication is crucial in these instances, and this is an example of where it is handy to have a succession plan already prepared. They provide guidance on the pace of the transition and indicate the roles of each individual at each point in time to allow for a smooth leadership transition and to maintain harmony in both the business and the family.