KEY POINTS:
The economy's health depends largely on medium-sized businesses passing into the hands of young and ambitious new owners and managers when their baby-boomer founders retire, says the ANZ National Bank.
The bank, which yesterday released its first annual survey of mid-sized or larger privately owned businesses, said the boomers' approaching retirement could have a profound effect on the sector.
ANZ National Bank chief executive Graham Hodges said the demographic shift, which would see a sharp jump in the retirement age population between 2006 and 2016, was often mentioned in relation to superannuation and savings issues.
"There has been less discussion around what that change in the demographic cohorts is going to do to business. This survey gives a feel for what's going on in the minds of the sector."
ANZ National corporate and commercial banking managing director Nigel Williams said the bank's Privately Owned Business Barometer found that just under half of main business owners of larger, privately owned companies were looking to retire over the next five years, but only about 10 per cent had formal plans for how they were going to get out of their businesses.
"If owners don't manage this well, the inherent wealth in their business might be a lot less when they come to exit than what they currently think it is," said Hodges.
Owners might choose to stay longer in their businesses but, having achieved a degree of comfort, would tend to be less aggressive in their investment and expansion plans and would perhaps focus on conserving the value of their business.
Williams said ANZ National believed owners should consider how to release capital or reduce their involvement while allowing a new group of management or owners to take the company to the next level.
"It is incredibly important that the next set of owners and management of these companies are successful in growing them.
"If they don't then we'll compromise New Zealand's growth," said Williams.
"We won't have these mid-sized companies become big companies."
The numbers
New Zealand's medium-sized businesses:
* 3500 firms employing 30,000 people with annual revenues of about $11 billion.
* 89 per cent are more than 10 years old, 35 per cent are more than 30 years old.
* 66 per cent of shareholders are over 50, one third are over 60.
