The majority of Australian family businesses are managed by older individuals who will soon have to decide what will happen to the company when they retire. However, just 25% of them consider succession a crucial issue.
These are the main findings of a study by Melbourne-based RMIT University and MGI, a consulting firm specialising in family businesses.
The report, called The MGI Australian Family and Private Business Survey, was based on a study of about 5,000 private companies in Australia.
It found that the majority of the country's family businesses are managed by individuals over 50 - 33% of family business owners and managers are between 50 and 59 years old and 25% are aged between 60 and 69 years.
However, only 25% of family business owners consider selecting a successor a crucial issue, while just under two-thirds reckon the next generation is less interested in the family business than they are.
The study also found that 61% of family business owners would consider selling the company, compared to 75% in 2006.
However, only one-third of respondents feel the firm is in shape to be either sold or passed on to the next generation.
“Very few [family business owners] have strategies in place to deal with a time when they will no longer be in control,” Sue Prestney, executive chairman at MGI Australasia, said in a statement on 19 January.
“There are a lot of reasons why this may be occurring – the impact of the global financial crisis, lack of motivated buyers, time needed to undertake succession planning or preparing to sell, or just the postponement of difficult family decisions,” she added.
However, according to Prestney, it is vital that family businesses decide in advance whether they want to pass the company on to the next generation or whether they want to sell it.
“Preparing a business for a successful sale requires a different approach to preparing for a smooth family succession," she said. "Undertaking exit planning can help increase the value of their businesses as well as safeguard the long-term health of Australia’s family business sector ."
Click here to have a look at CampdenFB's infographic and find out more about Australian family businesses.