New insights and knowledge in family business
Family business continues to evolve. BDO regularly examine and explore these changes to understand the impact on family business. Here we explore some recent issues and trends:
Succession planning: making sense of the numbers
The issue of succession is, without a doubt, the hottest topic at family business events. Read more.
Preparing the next generation
Key to the successful evolution of any family business is the development of the younger generation of the family members for the leadership, commercial and general business skills demanded of the family by the business. Read more.
Conflict and communication in family business
Difficulties arising from the overlap of family and business systems cannot be avoided entirely. Read more.
Women rise to the top in family business
BDO is a proud sponsor of the research conducted for the book “Women in Family Business Leadership Roles: Daughters on the Stage” by Mary Barrett and Ken Moores, which demonstrates women’s entrepreneurial leadership. Read more.
Personal Information Register
When someone passes away, their family, successors and executors need to know which arrangements to make, how to manage the estate, what accounts to close and so on. Read more.
Is your family business prepared for wealth transfer?
As a family running your own company, at some point you’ll need to think about transferring wealth and ownership. The coming years will mark a significant period of transition for Australia's family businesses as the ‘baby boomer’ generation thinks about retirement. Are family businesses ready for this step? Our research suggests not.
Intentions to transfer wealth
Many firms will need to transfer assets to the next generation within the next few years. Specifically, 40 per cent of family companies plan to make these transitions within the next five years – which is a relatively small window for such a large number of organisations to prepare their succession strategies.
Most of these companies (93 per cent) would like to keep the business in the family, transferring wealth to a family member. Such transitions require readiness from all parties – from current leaders to pass down their wealth; and the next-in-line to accept responsibilities and manage assets. Unfortunately, many companies aren't well-positioned to carry out these transfers. In fact, the BDO study found only 39 per cent have a plan in place; while over 70 per cent haven’t created formal management and governance structures. Yet they're still planning to embark on the process.
Preparing for a successful transition
What can families do to better position themselves for a successful transition? It starts with a comprehensive succession plan - one that nominates the next CEO and prepares everyone for the transfer. This includes:
- Learning the family network and skills for managing it
- Codifying knowledge, including tacit information
- Developing operational and financial management skills
- Acquiring a strong understanding of business, sometimes through formal education and by working outside of the company.
Current leaders must know how much their business is worth so they can plan the transition effectively. This is best achieved through a formal valuation process, though few businesses have completed such steps. Now is the time to change that.
Getting help with the transition process
BDO’s Family Business advisers are skilled and experienced at helping family business prepare for transferring wealth and ownership. We can also help with setting up a suitable governance structure, succession planning and a family charter.