• Family businesses account for approximately 70 percent of all businesses in Australia1
  • But just 9 percent have structured family meetings2
  • Only 30 percent have a succession plan in place3

With estimates suggesting $3.5 trillion will transition generationally in the next two decades across Australia3 family business owners have succession in the spotlight. However, this focus has not translated into increased planning with 70 percent of families globally2 not having a succession plan in place.

“Managing the transition – making continuity planning a focus for the business and the family – is key to success,” says Daniel Trimarchi, Director Family Enterprise Advisory at KPMG Australia. “That means clearly defining this objective – to embed continuity planning into broader plans for preserving wealth – is vitally important. It mean an increased spotlight on deliberate actions and planning around governance is needed.”

Mr Trimarchi emphasised that achieving a successful ‘succession’ isn’t just about passing the CEO baton to the next generation of family. KPMG says it’s more about the continuity of the family and the family’s wealth, seeing the family business as an asset or vehicle of wealth. The firm is experiencing strong demand for family advisory services which support the integration of family offices structures that may mirror corporate frameworks.

Robyn Langsford, who takes up her appointment as KPMG’s Global Head of Family Business from 1 June 2023 said: “In working with many successful family business entrepreneurs and family elders in Australia and around the world, there is often an unfair assumption that due to their experience and knowledge in business – that that knowledge and experience automatically transfers into the world of succession. But (as we’ve seen from the popular TV series, Succession) there can be competing agendas and priorities within family businesses. Complex governance challenges, and never before experienced dynamics regarding inter-generational needs, come into play.”

Unique skill set

Mr Trimarchi says that dealing with this generational transition in a business family involves a unique set of skills. The knowledge around governance frameworks and the process for their creation isn’t necessarily there within the family enterprise and governance structures are lacking in the majority of businesses. KPMG advises on both the why and the how of achieving this – looking out a decade and more.

Robyn Langsford also highlights the changing relationship between the family and their wealth with a larger focus on ownership governance and training the next generation to be good owners/stewards of wealth vs good managers.

“The focus is shifting towards ‘Business Families’ instead of Family Businesses,” Ms Langsford said. “They’re about increased diversification of wealth, they’re about letting go of leadership when the time comes and providing liquidity when family owners want to exit. They’re also about capital management and structuring for the future. These goals lead to the need for more complex wealth management. We are also seeing the rise of Family Offices where the function of that office goes beyond pure investment and addresses the relationship between the family and the wealth.”

As a co-author of the recently published whitepaper, “Reimagining Family Business Transitions: Rethinking, Rebalancing, Reinventing”, Daniel Trimarchi encourages business families to consider transition as a human process, affecting all individual and the organisation equally. Historically, the focus on Next Generation readiness has far outweighed the support provided to the current generation.

“We suggest looking closely at the continuity issues – how the family’s shared purpose is being defined and achieved through the transition of various roles and responsibilities within the business,” he says. KPMG recommends family business revisit the transition process undertaking ‘the three Rs’ outlined within the recent whitepaper.

  • Rethinking – understanding the family demographics, by rethinking who should be involved in the transition discussions and when those conversations should be taking place.
  • Rebalancing– the support that both the senior and rising generations need in order to make their ‘next chapter’ choices and personal transitions successful.
  • Reinventing – the transition process itself, understanding the need for the entire family and enterprise system to provide support for the senior generations involved in the transition.

Mr Trimarchi said that a starting point is to ensure you are holding space for the right conversations, in the right rooms, with the right people.

“You can use the support of independent facilitators and professionals to support the discussions and planning in a very effective way,” he said.

For further information

Marjorie Johnston
KPMG Corporate Affairs
M + 61407 329 430
E mjohnston4@kpmg.com.au