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A PwC survey has revealed 84 per cent of Australian family businesses are optimistic about sales growth over the next five years despite data indicating future growth risks.
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Family businesses optimistic despite facing growth risks
16 October 2014
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Australia’s optimism is in contrast to results from PwC’s global Family Business Survey that found just 53 per cent of Australian family businesses surveyed reported sales growth in the last 12 months, well behind the global average of 65 per cent.
David Smorgon OAM, PwC’s senior advisor on family, business and wealth, said the results provide “smoking-gun evidence that Australia’s family businesses are at risk of eroding the value or even derailing the business they’ve worked so hard to achieve.”
“They’re not doing enough to innovate and build blue sky potential in their business or apply simple measures to prevent minor niggles turning into full blown family conflict.”
The survey found that 38 per cent of the Australian respondents planned to sell or float their business, compared to just one in five globally, while only 24 per cent have plans to pass on management to the next generation.
Of those planning to sell or float their business, 68 per cent anticipate selling to another company, 32 per cent to private equity investors, 26 per cent to a management team and just 8 per cent aim to float.
Sue Prestney, partner in PwC’s Private Clients team said many owners have been holding on, waiting for more favourable market conditions to cash in and retire.
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“Others who haven’t kept pace with innovation may be struggling to compete and see sale as their only option,” she said.
“Buyers look for businesses that have growth potential: the more opportunity, the greater the bargaining power of the seller. Owners who fail to plan their exit risk leaving wealth on the table when it comes time to sell,” Ms Prestney said.
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