No Match Found
by Chelsie Harris
8 September 2022
Share this article
Australian private and family businesses are in the midst of a once-in-a-generation event. Over the next 20 years, a significant amount of responsibility and an estimated $4 trillion of wealth will change hands as owners retire, sell up, or pass the reins onto the next generation.
PwC’s recent Global Private surveys1 found that 65% of the future leaders of private and family businesses say that growth is a top priority and 91% of Australian family business owners expect to see continued growth in 20222. The big question they will be facing is how to fund that growth without taking on too much risk.
We appreciate that as a family business owner, the mental load never stops. The business is carried home with you when you ‘leave work’ and pressure from customers, employees and stakeholders is ever present.
Private Equity partners could offer an avenue to share that load; giving owners the ability to de-risk their business by taking some of their own money off the table and replacing it with growth capital, creating a value-add partnership and enabling the mental headspace to zoom out and approach growth strategy with a fresh perspective.
PE offers many benefits stretching beyond just financial investment:
PwC’s Global M&A Industry Trends 2022 Mid Year Update3 found that Private Equity’s share of M&A has increased from approximately one-third of total deal value five years ago to almost half today. It is estimated that Australian PE funds currently have around $26bn of ‘dry powder’ primed to be invested in Australia’s private and family businesses.
Lower-than-optimal M&A activity amongst private businesses is likely to be due, in part, to preconceptions about how growth should be funded. However, businesses prepared to look beyond their cash flow for growth opportunities can typically access more money.
The perception of PE investors might be that they are aggressive, looking to radically cut costs and change management as they are investing impatient capital. However these perceptions are often inaccurate and not all PE firms are the same.
Moreover, PE can be a particularly good match for family business owners because families are not necessarily required to give up the management of the business—or 100% of the profit pie.
In fact, a PE partnership can empower family business owners to really focus on what it is that drove them to go into business in the first place. PwC’s Owner’s Agenda framework can be of assistance here too; it is designed to help you develop both your ownership and business strategies in a consistent and integrated way, reflecting that you—and your passion—sit at the heart of them.
Finding the right business partner can be as important as finding the right partner in life. PE funds all have different personalities and cultural fit is critical.
In finding your perfect PE partner, you should look for:
Grow by all means, but make it sustainable. Working with the right PE partner can help accelerate your plans, find the right growth opportunities and ultimately strengthen your business.
©2022 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only and should not be used as a substitute for consultation with professional advisors. Liability limited by a scheme approved under Professional Standards Legislation.
PwC | Private | National Leader - Deals, Melbourne, PwC Australia
Tel: +61 3 8603 1231
PwC | Private | Partner - Deals, Sydney, PwC Australia
Tel: +61 2 8266 3524
PwC | Private | Partner - Deals, Melbourne, PwC Australia
Tel: +61 438 232 459
PwC | Private | Partner - Markets Leader, PwC Australia
Tel: +61 (2) 8266 2038