18 May 2007 
 
Australian family businesses - Do you have a succession plan? 
Small and medium enterprise succession plans are grossly neglected said Richard Edmonds, CEO Shelco at the Brisbane Chartered Accountants Business Forum today.  
 
"More than 85 per cent of business owners have not considered the best way to transfer their business to the next generation and this will be to the detriment of their estates and families," said Edmonds. "We're seeing families torn apart by monetary issues after the unplanned exit of a key person that can easily be avoided with some fundamental prior planning." 
 
Family controlled enterprises employ more than half the Australian workforce and ABS statistics regarding the ageing population show that an estimated $1.6 trillion of businesses will change hands in the next 10 years. 
 
"Family business owners should consider talking to accountants now about creating a plan and developing a proactive approach to their succession. People can exit a business for many reasons from resignation to death, and buy / sell agreements need to be set up to minimise tax and maximise the value of the assets that are being passed on," advised Edmonds. 
 
The emotion and legal decisions that need to be made for family business succession planning can make the process highly complicated. 
 
"In the first instance, family businesses must ensure that they are set up effectively. It is not uncommon for businesses that are more than thirty years old, to be structured based on avoiding death duties. But death duties were removed many years a go and subsequently these businesses may be liable to capital gains tax," said Edmonds. 
 
With a booming economy a wide range of Australian family businesses have greatly increased in value over the past couple of years and there needs to be reassurance that the wealth is maintained or distributed when the key members are no longer in the business. 
 
Estate equalisation can be very complicated if owners remarry or if the current owners only have some of their children working in the business. 
 
"Preparation is key to succession planning and every business has different circumstances to consider. Succession planning offers businesses the opportunity to structure the business in the most effective format that benefits the owners, the owners family and that of the employees."