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Family Business

Family Business

The Difference Between a Family Business and Other Business Types

Mention family business in conversation and many will think of a fish and chip shop in the suburbs. Well, I do, because I am the son of Greek immigrants. But it is a totally misleading image.

Toyota is a family business and until very recently its CEO was a direct descendent of the founder Sikichi Toyoda.

Clearly, family business should not be conflated with small business.

There is a distinction between how privately or family-owned businesses and publicly listed companies are operated which is quite important. Especially in Australia which has so many of them.

When you consider the top 10 Australian companies listed on the ASX by size you notice that many of the Australian companies are quite old and concentrated in very few industries.

BHP was founded in 1885.

The CBA was founded in 1911 as the legal predecessor of the Reserve Bank.

CSL was established in 1916.

NAB was formed from the joining of two banks formed in 1858 and 1834.

Westpac was founded in 1817 as the Bank of New South Wales.

ANZ had its genesis in London in 1835

Woodside Energy Group is a relatively young company being incorporated in 1954.

Macquarie Group in 1969.

Fortescue Metals in 2003.

Wesfarmers in 1914.

The average age of the top ten captains of the Australian Industry is about 118 years. Eight of them are either banks or miners. We are a high viz nation.

Family Business article feature image of workers in hard hats

This is not replicated in the US which has a much more dynamic series of large, listed companies in terms of age and industry.

The top 10 companies in the US are Apple, Microsoft, Alphabet (Google), Amazon, NVIDIA, Meta Platforms (Facebook), Tesla, Berkshire Hathaway, Visa and United Health. A much younger cohort of companies. This order is more likely to change over time than it is in Australia where change in the order of the dominant listed businesses is rare.

Family Business article feature image of a woman having coffee.

The important point here is that the younger more dynamic businesses in Australia are privately owned and quite often family businesses.

The top ten family businesses in Australia are in a much more disparate group of industries and include:

Recycling and packaging

Construction and Mining

Transport and Storage

Real Estate


Fuel, convenience and Restaurants

Food distribution

Construction (again)


The Business Cycle

I was listening to a Podcast (Episode #165 of The Knowledge Project: Competing Against Time) and discovered an interesting point. Family businesses have greater stability in that they don’t rise as strongly as public companies in good times or suffer as much during hard times.

Could this be one of the reasons why the Australian economy punches so much above its weight? Of the 195 countries in the world, we a ranked roughly 12th by GDP size and 7th in terms of GDP per capita.

It may be because the owners have the luxury of avoiding the risk that comes with chasing returns in a short time frame. Their overriding aim is to remain viable through business cycles.

A Dilemma for Family Businesses

The difficulty that a family-owned business has is a bit like the one that farmers have. If a farmer leaves a farm as an inheritance to his or her children, there will be a tendency over generations for each child to inherit a smaller and smaller farm as it is repeatedly divided.

Even if there is an effort to accumulate off-farm assets to help the process. Asset accumulation generally occurs at a rate that is slower than the accumulation of offspring and the offspring of those offspring.

This can cause strain on relationships between generations of a family business. It is part of the human condition. I have seen with my own relations how it has essentially destroyed relationships between fathers and their sons.

There may be no easy solution to the pathway of a family business but there are steps that can be taken to ameliorate the journey.

The primary step may simply be the realisation that if an opportunity for prosperity can be passed onto a child rather than a guarantee of one, the family would have done well with its business.

In order to preserve familial relations, the sale of the family business may need to be undertaken with due regard to the sensitivity of stakeholders who may not even have a formal stake in the ownership of the business.

This is easier said than done. Especially, if the groundwork has not been prepared and discussions have not taken place between family members. In this case, the decision to sell the family business could be fraught with consequences for relations between family members.

There may be a solution to this, and it lies in the process used to sell the business.

Value the Business

A sensible starting point would be to value the business. Including the family members in this process provides an opportunity to open the discussion about the future pathway of the business and the inevitability of the senior family member or members leaving the business.

A process to value the business can be an important initial step in planning the exit of owners and it allows for discussions without the business’ imminent sale hanging like Damocles sword over family negotiations.

Taking this a step further, a sensible approach to the management of a family business would be to value the business on a regular basis. Just as the accounting is done regularly. The benefits of this would be many.

As well as allowing the dialogue between members of the family business to occur on a regular basis, it would help to determine peaks and troughs in the market for businesses. It would also be a handy tool to analyse any investments that the family business has made in order to increase future profits or decrease costs.

If the process to value the business is undertaken regularly, later valuations of the family business are more in the nature of an adjustment to the previous valuation and can be undertaken relatively easily.

Registered Business Valuer

A business valuer such as a Registered Business Valuer could be a critical adviser to the ongoing operation of a family business. In fact, any business of scale. They would play a different role to an accountant by bringing a much stronger basis for valuing the business. They have access to market data that helps put a realistic value on a business.

Family Business article feature image of a family business meeting

The process can be quite shocking because, in my experience, a valuation by a Registered Business Valuer has quite often been lower than a valuation undertaken by an accountant.

Here is an article where I talk about selling your business in three easy steps simply called “How to sell your business in three easy steps“.

When you consider that a Registered Business Valuer includes in his or her network many business brokers and Mergers and Acquisitions specialists and may even be a business broker themselves, it is worth getting their input to recalibrate expectations of a sale outcome.

Listed businesses are an important vehicle for wealth accumulation. If these are limited it will have an impact on our financial lives and ability to retire. If you want to read more about personal finances, you can catch up on articles on my other site. Here is a good one to start with titled “Clipping the Ticket“.


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Contact Harry Notaras at Hunting Business Sales and Valuation Services to arrange to have your business venture valued. Allow Harry to engage his high level of expertise and years of experience to gain a comprehensive valuation.

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