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The importance of succession planning

Succession planning involves much more than deciding who takes over when you retire. A thorough succession plan, agreed on by everyone involved, can help propel the future success of your family as well as your business, says ANZ’s Dan Murphy.

17 August, 2023
Partners, Article, Succession Planning, Family Business Advisors, Family Business Succession
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The importance of succession planning

Succession planning involves much more than deciding who takes over when you retire. A thorough succession plan, agreed on by everyone involved, can help propel the future success of your family as well as your business, says ANZ’s Dan Murphy.

When succession planning is done well, it can unlock significant benefits for a family business. When it’s not done well, it can lead to family conflict, the dissipation of wealth, and even business failure, says Dan Murphy, Director at ANZ Private and an accredited family business adviser with Family Business Australia.

“Succession planning is probably one of the most important things for a family business to get right, if they want to sustain themselves and achieve their longer-term goals and vision,” he says.

Planning properly for your heirs and business is a broad and continuous process that should involve the whole family. It’s not only about who takes over when the principals retire.

Having a detailed and up-to-date succession plan can assist you and your family to navigate difficult times. It can provide a roadmap during a crisis, prevent resentments, and ensure the business stays on-course through inevitable times of change.

Laying the foundation for a great succession plan

Murphy suggests you put regular dates in the calendar to discuss the future of the business with your family.

“It’s pretty common to hear families say, ‘Well, we talk all the time’, which is certainly true in a family business. But it’s really important to set aside regular time to discuss these big issues around vision, purpose, and succession,” he says.

He adds that building a shared understanding across the whole family means having open, honest dialogue and ensuring that all family members are involved, including the younger generation.

“The senior generation might have quite clear ideas about what the family business should look like, what roles people should play, what the ownership structure should look like, how the wealth should be used… but the next generation will have their own ideas, their own aspirations.

“It’s really important everyone contributes to those conversations and that those ideas are heard,” he says.

Preparing for succession planning

Before sitting down for a formal meeting with the whole family, it’s a good idea to have one-on-one conversations with family members – including the next generation – about their ideas and expectations. You should also share your own vision for the business and why it’s important to them.

Many businesses engage a trusted adviser to act as a neutral facilitator for formal family meetings. This adviser may also serve as an ‘interviewer’ for the one-on-one conversations.

“You want to choose an adviser who has an appreciation of some of the unique challenges that family businesses face, particularly on succession,” Murphy suggests.

“They should also have the ability to facilitate a discussion in which all parties can reach an agreement.

“Eventually, they’ll help you implement the plan, which may encompass estate planning, financial planning, insurance, structuring for tax purposes, powers of attorney, and other legal and financial vehicles for wealth.”

Usually, this adviser is a trusted professional who already assists the family, such as a lawyer, accountant, banker, or financial planner.

Succession planning can reduce future stress

A succession plan can reduce the stress and pressure of heirs taking over a family business unexpectedly in a time of crisis. And if life does go to order, then a succession plan is another way you’re ensuring that your family is supported, and that the legacy of your business is carried on.

Five tips for good succession planning

1. Start early

Start discussing the succession process well before significant decisions need to be made or come into effect. This should include planning for a transition as well as managing family wealth such as investments and philanthropic interests.

2. Know what legacy you want to create

It’s easier to have a successful transition when everyone agrees on what they want the family wealth to achieve. This unifying purpose can then serve as a basis for other decisions, such as what roles people play in the business. Without that vision, all parties are focused on their own needs and goals rather than an agreed destination.

3. Get the right advice at the right time.

Having a trusted adviser is important when you’re developing a succession plan; they are equally important when you implement it. Your adviser can help you put the right structures in place to manage tax obligations, insurance, and investment portfolios.

4. Nurture the next generation

Share your experience, knowledge and eventually your responsibilities with the next generation. This may include supporting your heirs in their own studies or entrepreneurial endeavours – with the aim that they return with experience and knowledge that can help the family business.

5. Monitor and update plans

Always keep on top of your succession plan and update it when necessary.

  • Hold regular family meetings where changes (such as a divorce, marriage, or birth of a child) are discussed, and decisions are documented.

  • Check in with your advisers regularly and involve them in meetings and conversations.

  • Ensure you maintain the correct governance to manage an efficient wealth transition and business succession.

Read more about succession planning

ANZ Private’s Next Generation Wealth Transfer Guide has been created to aid discussions about wealth within families. Reach out to ANZ Private to receive a copy of the guide and learn more about succession planning.


Information provided is general in nature only and does not take into account any person's personal needs, circumstances or objectives. ANZ recommends that you read the applicable Product Disclosure Statement or offer document before deciding to acquire or hold any product. Fees, charges and eligibility criteria apply.

ANZ Private Bankers and advisers are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ), the holder of an Australian Financial Services Licence.