In the next ten years, $607 million will change hands in the family business sector when 60 per cent of current family business owners retire.
In the next ten years, $607 million will change hands in the family business sector1 when 60 per cent of current family business owners retire2.
These staggering amounts don’t account for any extra equity that will be transferred when proprietors make unexpected exits from their businesses, through health incapacity or death.
Holding total assets of $1.2 trillion3, family businesses need to seriously consider their future business situation if a key member of the business team dies or is incapacitated.
The ownership changes in the family business sector may mean that some of the $607 million is lost or tied up in family disputes, as businesses work through possible ownership issues that arise from the loss of a key member of the family business.
A Business Succession Plan is one method of ensuring that this doesn’t happen.
This plan will allow family businesses to prepare for the sudden loss of a key staff member. It is a method of documenting what will happen to a business in the event of all future foreseeable possibilities, including retirement or unexpected death. It is designed to protect both the business and ongoing family relationship.
When surveyed, 70 per cent of family business owners believed succession planning was important but only 12 per cent had a documented plan4.
Allan Griffiths, Group Director of Distribution and Managing Director of Norwich Union Life Australia, said responsible business owners need to ensure that their business can continue to operate when the unexpected happens.
“By documenting a business succession plan, owners are ensuring that important changes to their companies can be made quickly without family disputes. It also means at a time of change their business and dependants will enjoy uninterrupted financial security. “
“Family businesses often run under the assumption that in the event of retirement, or even death of a family member, there will be an amicable resolution for the business. This is not always the case and proprietors need to ensure the family and business is protected during a time of change.”
The business risk insurance package from Norwich Union includes reference and simplified information to independent Financial Advisers who have recognised the largely untapped opportunity to sell risk insurance to small to medium size businesses.
“Norwich Union’s practical assistance will help advisers cut through the mystique surrounding business succession planning and help you concentrate on the business risk insurance components of the business succession planning process,” said Allan.
Allan Griffiths is available for interview on 0419 307 319.
For further information, please contact:
Simon Morgan
Group General Manager Public Affairs
Phone (03) 9829 8892
Mobile 0407 966 632
1Monash University Family and Private Business Research Unit 1997
2Monash University Family and Private Business Research Unit 1997
3Monash University Family and Private Business Research Unit 1997
4Monash University Family and Private Business Research Unit 1997
Note to editors
- Norwich Union Australia is a group of three specialist financial services companies; Navigator, Norwich Union Life and Portfolio Partners. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Norwich Union Australia is part of Aviva plc, the world’s seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva’s principal business activities are long-term savings, funds management and general insurance. It has a market capitalisation of approximately A$27 billion at 16/07/02, worldwide premium and investment sales of more than A$72.2 billion from ongoing business and more than A$519 billion in assets under management. The group has 64,000 employees and more than 15.25 million customers.
- Norwich Union Australia has a sister company, CGU Insurance Ltd, a top 5 general insurance business, which operates independently in Australia.
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