![Debbie Hill, director of Supagas, a family business which beat the 'third generation curse' and sold to a Japanese rival ...](/content/dam/images/g/u/o/4/v/v/image.related.afrArticleLead.620x350.guo27y.png/1488510855500.jpg)
When Debbie Hill and her father sold their family firm Supagas to Japan's Taiyo Nippon Sanso Corporation (TNSC) last year for over $300 million, it not only ended 50 years of ownership but was an example of a selling trend trumping succession among the nation's family-owned businesses.
More families are accepting outside offers to buy their businesses rather than passing them along to the next generation, observed PwC Private Clients partner Paul Lewis. As more private equity has become available in the years since the global financial crisis, the baby boomer generation which controls over $3 trillion in private business assets are doing deals because they have often failed to develop a robust succession plan, Mr Lewis said.
Speaking at a "successful succession planning" roundtable in Melbourne co-hosted by The Australian Financial Review and PwC, Ms Hill, who remains a director of the company her father and his two brothers founded in 1968, said the sale to TNSC was an emotional experience for the family.
"I went home crying every night for three months. Dad and I didn't really want to sell but we knew it was the right time for the business and the people in the business – but absolutely the wrong time for us. We were at a stage where we were too big to be small but too small to be big," she said.
![The AFR/PwC roundtable on how to succeed at private business succession: Grant Menzies (Adina Watches), Debbie Hill ...](/content/dam/images/g/u/o/4/i/0/image.imgtype.afrArticleInline.620x0.png/1488342459624.jpg)
Supagas proved an exception to the rule which sees 70 per cent of private businesses built by a founding generation have their value squandered by the next generation, said PwC Private Clients partner David Wills.
Mr Wills blamed an unwillingness to have "the family discussion as opposed to the business operations discussion" for the so-called "third generation curse".
For Ms Hill, open communication was always part of the family make-up. She remembers sitting around the family dinner table debating business and politics with her father.
"We talking about everything. There was never a topic we didn't discuss and by talking to Dad you became confident about debating him on business matters too."
A number of participants at the roundtable agreed that open communication among family members was instrumental in their businesses continuing to succeed in family hands.
![Vanessa Katsanevakis, of Sussex Taps, benefited from a three-year transition period from her father who founded the ...](/content/dam/images/g/u/o/4/c/x/image.imgtype.afrArticleInline.620x0.png/1488342156514.jpg)
Grant Menzies, the chief executive of Australia's last watch manufacturers, Adina, says a "robust discussion" with his father, who founded the business in 1971, is often the catalyst for change.
"There's been times we've been throwing the factory keys at each other in the carpark, arguing, but then after we've had it out, we tend to get on with what 's been decided very quickly."
Allister Lewison, of Melbourne-based property investment company OpenCorp, says his family business relies heavily on strong communication between its three principals.
"We all have different skillsets, which I think is important for any siblings in business together. Yet we all know each other's personality, so I know I'll have to sell a proposal differently to my brother than to my brother-in-law," Mr Lewison said.
![PwC Private Clients parter Paul Lewis (left) with OpenCorp's Allister Lewison](/content/dam/images/g/u/o/4/l/w/image.imgtype.afrArticleInline.620x0.png/1488342495624.jpg)
Nevertheless Mr Lewison said OpenCorp's three related founders were beginning to discuss bringing in outside management, both to allow them to focus more on strategy but also as a circuit-breaker to ensure decisions continued to be made harmoniously.
Meanwhile two family businesses represented at the roundtable that are now in the complete control of the second generation, IT managed services company ASI Solutions and high-end tap manufacturer Sussex Taps, benefited from a planned, lengthy handover period.
For Nathan Lowe at ASI Solutions, it was a five-year stint as general manager, after which his parents withdrew altogether from day-to-day involvement in the business, albeit they remain directors.
For Vanessa Katsanevakis at Sussex Taps, there was a three-year transition period arranged with her ailing father, in which she and her husband George changed the direction of the business.
"The succession depends on communicating clearly to your staff as well as your family," Ms Katsanevakis said.
"We had the chance to outline a new vision for Sussex, where we'd maintain the quality of our local manufacturing but also listen more to what the customer was asking for," she said.
PwC's Mr Wills said there were encouraging signs a new crop of "next generation" family business leaders were learning from the mistakes of the past.
"There's very little doubt open communication works – it's the catalyst to removing tension. It's one of the hallmarks of a new generation of successful family businesses. They're embracing transparency, diversity and focusing on professionalism by bringing in outside skills," Mr Wills said.