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The importance of succession planning for Australian agribusinesses

Grant Thornton’s recent Family Business Survey Report identified succession planning as a top priority for Australian family businesses with 72 per cent rating it as important for their business in the next 24 months.

When it comes to succession planning there are various legal, financial, and emotional considerations that must be addressed to ensure a successful transition for the next generation. These considerations may be felt more acutely by Australian farmers as the family business is commonly also the family home – and often home to multiple generations – which adds many complexities when making decisions for the future.

The National Farmers Federation estimates 99 per cent of Australia’s agricultural businesses are wholly Australian owned. Making decisions about the future of the farm, managing finances, and dealing with employees and suppliers are all tasks Australian farmers must consider, particularly when structuring a succession plan for the farm.

Succession planning for a family farm involves not only compliance and documentation, but also the emotional wellbeing of all family members. Passing the farm onto the next generation can be complex, as wealth may not be easily divided, there may be no other assets to consider, and siblings may not have the funds to buy each other out. As farming land becomes more valuable, keeping it in the family will inevitably become more challenging. To avoid conflicts and preserve the legacy of the family farm for generations to come, it’s important to have a plan in place that outlines the roles and responsibilities of each family member.

Adam Fisher, Partner and Head of Private Business Tax & Advisory at Grant Thornton in Adelaide said: “When you own a family business, transition and change are inevitable, so it’s important to be prepared with a solid succession plan. Growing up on a rural property myself, I understand the challenges of handing over the family farm to the next generation such as communication breakdowns, lack of trust, and difficulty in letting go of control.

“Every family business and farm is unique, but a common thread is that every family member is emotionally invested, particularly when it comes to succession. Whether you want to divide assets, sell up, or keep the family business together, an independent, third-party advisor should be considered. The right external advisor will provide technical advice and play a facilitation role to guarantee everyone in the family has a chance to speak and be heard to secure an outcome the entire family is happy with,” Adam Fisher continued.

Grant Thornton Australia’s 2023 Family Business Survey Report identified that succession planning continues to be a key priority for family businesses, with 43 per cent currently formulating a succession plan, and 38 per cent already implementing a plan. Only 15 per cent of family businesses have no plans in place for succession.

The Family Business Survey Report was released on 19 September 2023 in celebration of Family Business Australia Day revealing the key challenges and focal areas for Australian Family Businesses.  

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