Baby boomers hit by succession concerns


By Daniel Paperny

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Business succession and exit planning specialist Succession Plus has signed on with Sentry Group to raise awareness about the value of employee share ownership plans (ESOP) for small business owners looking to retire.

Sentry Group chief executive and chairman Murray Hills said the national licensee group had noticed succession planning was a significant challenge for Australian small to medium enterprise (SME) owners, particularly among the baby boomer generation.

“The depth of challenges facing baby boomers seeking to retire in the coming years is enormous, with the greatest [concern] being that of trying to sell a business in a buyers’ market,” Hills said.

“For many of these business owners, their retirement nest egg is tied up in the enterprise and if they are unable to maximise the value and then extract it on sale, will face the prospect of a very gloomy existence in their twilight years.”

Speaking at a national roadshow event hosted by Succession Plus and financialobserver in Sydney this week, Succession Plus founder Craig West said there were many benefits to be gained through an ESOP, including employee retention, business productivity and strategic succession planning.

However, West said poor preparation on the part of Australian business owners meant many had not yet started their retirement journey nor set out clear exit objectives.

He said: “75 per cent of businesses do not have an agreement on a proposed succession plan even though 33 per cent are relying on the sale of the business for cash to fund retirement.

“Business owners are walking into retirement with far less than they could have – and in the worst-case scenarios simply switching off the lights and entering into retirement with nothing from years of hard work, dedication and exertion in their businesses.”

Under the partnership, Succession Plus will conduct an extensive education program with Sentry advisers, comprising a series of workshops, training and development, and visits and consultations with adviser SME clients – with ESOPs the first stage of the program.

West noted ESOPs should be considered an important succession solution for business owners seeking to retire, particularly as they provided certainty for existing employees, customers and suppliers.

“The thought of a business being sold, merged or closed often fuels disquiet among employees, with disgruntlement, insecurity and potential for key employees to jump ship,” he said.

“An ESOP empowers employees – it allows them to think and act like business owners by matching the performance of a business with their ability to build equity.”

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