Money
Issue No. 31 - October/November 2006
Firms value at risk as Boomers bail out
by Mr Geoff Thomas
South Australia prides itself on being the small business state, and with the demise of many of the brand-name head offices in town, this state is even more reliant on small business providing growth. Most small businesses are family businesses, run by the patriarch, with possibly some family members involved as well.
While we know that names such as Cooper and Michell have successfully transitioned across a number of generations but most current family businesses were started, and are owned and run, by Baby Boomers who are now reaching retirement age.
Most owners (61% according to a recent KPMG survey) plan to retire in the next 10 years and, according to the same survey, almost two in five plan to sell their business rather than pass it down to their children. And another survey found only 21% thought their children were fit to run the business anyway.
Most owner managers are under-prepared to sell their businesses. While they 'plan' to retire, until a financial or medical crisis strikes there’s no pressing need to prepare to sell. In the words of Woody Allen: “I don't want to achieve immortality through my work... I want to achieve it through not dying.”
It is going to be a buyer’s market for businesses over the next 10 years. Our estimates are that in South Australia alone there will be a new family-owned business succession every business day for the next 10 years. And that’s not fish and chip shops – that’s ...
