Kirsten Taylor-Martin is an accredited advisor with Family Business Australia and Family Firm Institute. With a passion and deep understanding of her industry, Kirsten has developed a specialist knowledge in the area of Family Business advisory in Australia. Kirsten has extensive experience helping families develop tailored governance structures to suit their family needs. She has been involved in developing a Grant Thornton approach to succession planning in family business which has successfully set businesses up for the future generations. Kirsten works together with you the client's accountant to ensure the collaborative service approach is seamless to the client. Kirsten has a genuine interest in the family business story. From the moment a family business discusses their business with Kirsten, they instantly feel she is just as passionate about their business's success as they are.
Joanne Kenderes is a senior advisor to the privately-owned businesses, charities and individual clients of Grant Thornton. She has extensive experience in devising and implementing strategies to enable clients to build and protect their wealth, and assist in wealth transfer to the next generation. Joanne specialises in constructing and managing personalised portfolios for clients. Joanne has more than 20 years experience in the finance and investment industry and more than 13 years advising clients at Macquarie Bank and Goldman Sachs JBWere. She previously held roles in funds management at Perpetual and Colonial First State, both in Sydney and London.
We had the pleasure of sitting down with Kirsten and Joanne recently to discuss key challenges and opportunities facing the industry today.
You can find the full Q&A below.
Can you tell me a little bit about yourself?
I am a family business advisor who is driven by a passion to ensure family businesses can prosper for future generations.
“Only 15% of mid-market family businesses transition to a 2nd generation.”
My goal is to work with family businesses to change this statistic. This sector is the backbone to our economy and the values they instil into their businesses can’t be replicated.
I am an accredited Family Business advisor with Family Business Australia and Family Firm Institute.
Using my extensive experience I help families develop tailored governance structures to suit their family needs. I have been integral in developing the Grant Thornton framework to succession planning – FREEDOM.
As a parent of two beautiful children, I understand how parents want to give their children all the opportunities in the world. I also understand handing them on a silver platter doesn’t necessarily help them.
Being a Chartered Accountant, my experience also includes a focus on mid-sized businesses and high net wealth families ensuring they have effective structures in place to reach their goals.
I am a Private Wealth Advisor who is passionate about helping each generation make the most of their wealth and opportunities.
My extensive experience includes devising and implementing strategies to enable clients to build and protect their wealth, and assist in wealth transfer to the next generation.
I am a strong believer in a collaborative approach to advice, where professionals in each area of expertise working together create solutions that could not be developed in isolation.
As a Certified Financial Planner with more than 20 years’ experience, I have successfully assisted clients to diversify away from their business interests to create an alternative source of wealth and security for current and future generations.
What are some of the challenges facing in terms of succession planning for family business?
We see seven challenges for family businesses when undertaking a succession plan:
- Financial Security: Have the current owners accumulated sufficient wealth outside of the business…or, will a transfer generate sufficient funds to properly fund their retirement?
- Retirement Plan: Do the current owners have meaningful activities outside of the business which will sustain them as they scale back their involvement in the business?
- Electing a successor: Are the current owners able to choose a successor from the available candidates…and is the candidate willing to accept?
- Education and Support: Does the next gen have the relevant qualifications and experience, and access to personal development, coaching and mentoring resources to guide them through the transition?
- Disasters & unplanned events: Is there a plan which considers contingencies in the case of death, disability or other crisis events?
- Objectives alignment: Do the current and next gens have a shared vision or agreed family values in respect of the family business?
- Mistrust: Is there appropriate communication and trust between the current and next gens, enabling effective decisions and the sharing of information?
Challenge 1 & 2 relate to the Current Generation, whilst challenge 3 & 4 relate to the Next Generation and challenge 5, 6 & 7 relates to both generations and how they work together.
What are the common mistakes practitioners usually make when they work in this area?
We often see a couple of common mistakes by practitioners:
- Many of the advisors in a succession are technically trained such as accountants and solicitors. They are looking at the technical issues, but
“Only 15% of the Estate-Transition failures are attributed to ALL other causes such as tax considerations, legal issues and mission planning.”
- Advisors are often technically trained and the training is based around finding solutions for problems. Often in Succession Planning work, the family isn’t looking to be told what to do in most situations. They are looking for someone to facilitate their conversations to keep them on track and ensure the conversations are not charged by emotions.
“The origins of the 70% failure rate in estate planning transactions lie within the family itself.”
What are some of the big trends and developments you see ahead in this area?
Previously we found the incumbent generation would not consider the prospect of selling their family business. The business was created to be passed onto future generations. In some families, they created the business to give their children a job and other family businesses ensure their next generation were educated, had travelled and gained work experience to later return to the family business and join the leadership team to take the business to the next level.
Now, we are starting to see a shift. The next generation isn’t interested in the family business. The incumbent generation don’t want to force them to join the business and are considering sale.
We are also seeing a move away from family business and towards what I call “family brand.” What does this mean? The incumbent generation may be a property development business but the next generation is training to be a veterinarian. The incumbent generation acquires a veterinarian business and both businesses operate under the “family brand.”
The third scenario we are seeing is after the family business is sold, a Family Office is opened and the funds are invested to create wealth for future generations. In some situations if the next generation brings a business case of a business they would like to start, the Family Office may invest or offer funds to invest in the business.
Your topics focuses on “Riches to Rags in 3 generations: How can you prevent the Trend.” Why is it important for practitioners to attend your session?
Family businesses are a critical component of the world’s economies. In Australia they represent 70% of all businesses and employ half of Australia’s workforce. According to various studies, family businesses also tend to be more profitable and carry less debt than non-family businesses.
But in 2011, the first Australian baby boomers turned 65, and 5,000 are currently joining their ranks every week, preparing for the next phase of their lives.
What do you see are some of the key takeaways and benefits for practitioners for their practice from attending your session?
We will be introducing attendees to FREEDOM a seven-step framework which aims to assists a family in being prepared and overcoming the 7 challenges we often see interfering with a successful succession plan.
You can hear more from Kirsten and Joanne at the 3rd Annual Business Succession and Estate Planning Conference seminar, being held on Wednesday 21 February at the UNSW CBD Campus, Sydney.