Australia is currently in the midst of the most significant wealth transfer in history. This generational handover includes family businesses.
To safeguard the long-term success of these businesses and preserve their wealth, it is important to undertake strategic business succession planning well before any transfer is made.
More than $3 trillion in assets is forecast to be transferred over the next two decades from older to younger Australians. These inherited assets will mostly come in the form of superannuation and residential property, and also includes businesses. This great wealth transfer is going to make an enormous impact in coming years by reordering the wealth distribution in the economy.
In terms of businesses, managing the shift effectively involves preparing for the transfer of the ownership and executive management to ensure the business continues to grow and remains profitable. It is vital that business owners and company boards take the time needed to consider business succession well before any transition event, as processes can be complex and require careful consideration.
Succession planning needs vary based on the business type and stakeholder composition. In Australia, where over 1.4 million family businesses employ 50 per cent of the workforce, succession planning is often more complex than in non-family businesses. Complex family structures, including blended families, add challenges to succession planning.
Without proper preparation, passing on wealth can lead to unnecessary taxes, legal issues, and in some cases, family conflict.
Long-term succession planning enables families to strategically identify and develop future leaders, determining which family members will assume leadership roles, the skills they require, and the timing of the transition.
Furthermore, comprehensive succession planning facilitates effective tax planning, corporate structure reviews, estate planning, structured family meetings, knowledge sharing, and a robust wealth management plan.
Businesses can make the process easier by using the services of specialised business advisors to manage their assets and succession planning. Advice can be tailored to meet the needs of individual families including consolidating assets, managing property, coordinating investment vehicles such as trust funds and foundations, as well as handling legal and taxation matters.
For family businesses, an effective succession plan is integral to the running of that business. Planning allows for proactive management of family dynamics, fostering harmony, addressing fairness and expectations, which can all help to secure the business legacy.
This article was first published in the Autumn 2025 issue of Financial Times.