September Industry Update Breakfast

Colliding generational perspectives,
reinvigorating successful family businesses
September 2018
Familybusiness
–thebalance
forsuccess
KPMG.com/au/enterprise

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. 2
Whywedowhatwedo
YouroutcomesOurpurpose Ourapproach
Passionately believe that:
 Optimal business model;
 Make significant contributions to
society and the economy
(domestically and globally);
 The challenges affecting the
sustainability of family businesses
are normal and predictable
 Avoid distraction to the business
and disharmony amongst the
family; and
 We create and capture value for
our clients and our Firm.
We have:
 A National practice of trained FBA
accredited advisers, with:
– Deep technical expertise; and
– Practical experience.
We:
 Provide the Audit, Tax & Advisory
services you’d expect of a global
advisory firm delivered by a
practice dedicated to the mid-
market
 Understand the Family system
and lifecycle;
 Understand the Business system
and lifecycle;
 Understand how these two
systems intersect for the benefit
and/or detriment of the family
and business; and
 A proven parallel planning
process incorporating the
business and the family, tailored
for where the business and the
family are in their lifecycle.
We:
 Build families’ awareness of family
business dynamics;
 Understand your family and your
business;
 Create alignment amongst the
family and between the family and
the business;
 Build commitment from the family
to carry on as owners and
professionalising management;
 Execute/document recommended
plans; and
 Build capability amongst the
family and business.

“Colliding generational perspectives reinvigorating successful family businesses”
• Insights from the analysis of data collected highlights there are clear differences in how the current
and future leaders of family businesses view success when assessing sustainable transition from
one generation to the next.
• We discovered that the tensions of successfully trying to balance the needs of the family and
business, the generational differences in approach to the family and the business, and suggest that
a lack of effective communication is the underlying theme that may threaten sustainability of
family businesses.
• We also acknowledge the normal and predictable longitudinal trends on business performance,
governance and succession planning.
• We brought the data to live by sharing stories and perspectives from 3 successful family businesses
2018FamilyBusinessSurvey

Familyperspectives:Fleming/McLeanFamilies

Socioemotionalwealth–underpinningsuccess
• Socioemotional wealth refers to a families’ non-financial objectives, and has 5 different dimensions: FIBER
• SEW links to the financial success of the business
• Families with high SEW are more likely to keep the business in the family, while those with low SEW are
more likely to close or exit the business
• Family control and influence – the value that a family places on its ability
to control the strategic direction and key decisions of the business;
• Identification with the business – the value that family places on the
identity it gains through its involvement in the business;
• Binding social ties – the value that family places on the relationships with
different stakeholder groups;
• Emotional attachment – the extent to which a family places importance on
family cohesion and wellbeing, as part of their involvement with the
business;
• Renewal of family bonds through dynastic succession - the extent to
which the family desires to hand down the business to future generations.
© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Socioemotional
Wealth
Financial
Performance

PerceptionsofSEW
The survey showed the top three
SEW objectives of business families
were:
1. Emotional attachment between
family members (E)
2. Family control and influence (F)
3. The renewal of family bonds
through dynastic succession (R).

Familyperspectives:DowsingFamily
JacintaDowsing(Non-executiveDirector)&
BohdanDowsing(ExecutiveDirector)
DowsingGroup(WA)

Communication
• Families that openly discuss information
are better equipped to identify potential
successors, promote their development,
as well as address difficult issues as they
arise.
• Future family business leaders reported
lower satisfaction across all well-known
communication features.
• There is a generational difference in how
communication occurs – current leaders
are generally more implicit, while future
leaders want plans outlaid explicitly.

FamilyPerspecitves:ValmorbidaFamily
JohnValmorbida(ManagingDirector)&
JamieValmorbida(ExecutiveDirector)
JovalGroup(VIC)

Confidence&commitment
• Current leaders need to educate future
leaders on the complexity and challenges of
leading a successful business.
• Future leaders with their optimism,
enthusiasm and entrepreneurial spirit play an
important role in challenging long-held
assumptions of how ‘things should be done
around here’.
• 60 per cent of current leaders believe that
the potential successor is prepared to take
over
• 36 per cent of future leaders believe that
they are ready to take over.
• Future leaders are more confident in their
‘soft’ skills than they are in their ‘technical’
skills.

PerformanceIndex
Socioemotional Financial
100% to family Minority
to outsiders
Majority
to outsiders
Sell all Close
16
17
18
19
20
21
22
23
Performance and ownership transition strategy
Transitionstrategies
There are two key transitions – the most senior decision-
making role to another person, and ownership (and
control) of the business to new directors and owner
• Leadership transition strategies;
• Who to transition to?
• When will I transition?
• Ownership transition strategies;
• 10 percent within the next 12 months
• 30 percent within the next two to four years
• 60 percent in the long-term (five or more years
away)
• Nearly one-third (32 percent) had no ownership transition
strategy.

5thingsyouneedtoknowtopreservetheprosperity
ofthefamilybusiness:
1. Communicate, communicate, communicate!
2. Embrace the entrepreneurial spirit of the NXG & harness the power of knowledge, experience
and wisdom on the current business leader
3. Engage in healthy conflict
4. Empower the NXG to take over the family business with confidence
5. Don’t wait – start now!

www.kpmg.com/au/fbsurveyMoreinformation
ContactKPMGEnterprise
AndrewMuscara
+61392885038
amuscara@kpmg.com.au
MichelleDeLucia
+61392886656
madelucia@kpmg.com.au

© 2016 KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of
KPMG International.
Liability limited by a scheme approved under Professional Standards
Legislation.
The information contained in this document is of a general nature and is not
intended to address the objectives, financial situation or needs of any
particular individual or entity. It is provided for information purposes only and
does not constitute, nor should it be regarded in any manner whatsoever, as
advice and is not intended to influence a person in making a decision,
including, if applicable, in relation to any financial product or an interest in a
financial product. Although we endeavour to provide accurate and timely
information, there can be no guarantee that such information is accurate as
of the date it is received or that it will continue to be accurate in the future.
No one should act on such information without appropriate professional
advice after a thorough examination of the particular situation.
To the extent permissible by law, KPMG and its associated entities shall not
be liable for any errors, omissions, defects or misrepresentations in the
information or for any loss or damage suffered by persons who use or rely
on such information (including for reasons of negligence, negligent
misstatement or otherwise).

September Industry Update Breakfast

Recommended

Recommended

More Related Content

What's hot

What's hot (6)

Similar to September Industry Update Breakfast

Similar to September Industry Update Breakfast (20)

Recently uploaded

Recently uploaded (20)

September Industry Update Breakfast