The blood, sweat and tears in a family business takeover

The Australian family business sector, worth $1.6 trillion, is in for massive upheaval, with MGI forecasting an influx of family businesses for sale as the baby boomers retire.

It’s a well-trodden path. Many iconic Australian family businesses have been acquired. But the takeover of a family business is different from corporate takeovers because it’s about a loss of identity.

A case in point, as Alan Kohler has pointed out, is the Arnott’s family business (Arnott’s new bread and butter, January 23), particularly for Steve Arnott, who was then a 40-year-old sixth genner.

Arnott’s is only one of many.

MULTIPLEX:  John Roberts established Multiplex as a small construction company in Perth in 1962.  He named the company after the Echinopsis multiplex cactus, which multiplies rapidly. Roberts could see the potential for swift growth and the company started delivering major Perth landmarks before expanding into Sydney and then opening offices in Victoria, Australian Capital Territory, Northern Territory, South Australia and Queensland.

By 1989, it was Australia's largest privately owned construction company and was expanding offshore into South East Asia, New Zealand, the Middle East and the United Kingdom. In 2007, Canadian private equity group Brookfield Asset Management conducted a $4.2 billion cash raid on Multiplex after securing the crucial Roberts family's 26 per cent stake. Denby, Andrew and Tim Roberts received about $1.2bn when they sold their stake in the company founded by their late father. As part of the deal, they resigned from their positions, ending their relationship with Multiplex.

KIWI:  William Ramsay in Melbourne created Kiwi shoe polish in 1906.  It got that name because his wife was from New Zealand. The kiwi bird also looked good as a logo on the round boot-polish tin. The business grew and was selling worldwide and plants opening everywhere. By 1924 Kiwi shoe polish was being exported to 50 countries, including Russia, China and parts of South America. In 1984, Chicago-based Sara Lee paid $327m for the company. In 2011, Sara Lee offloaded its global shoe care business, including the Kiwi brand, to SC Johnson for $325m to shift its focus on to its core food business.

DARRELL LEA: The nation’s most famous confectionary business was started when London-born Harry Lea and wife Esther began making chocolate in the back of their fruit shop in Sydney's beachside suburb Manly in the 1920s. Four generations of the Lea family created a multi-million dollar business named after the original Lea family’s youngest son with 69 retail stores, 2006 Darrell Lea stockists nationally, 700 employees and export businesses to the United Kingdom and United States. The company suffered family feuds. There was also a protracted legal battle with Cadbury over Darrell Lea’s use of the colour purple.

Riddled with debt and losing $200,000 a week, it was placed in voluntary administration in July 2012 after more than 85 years. In September of that year, Queensland’s Quinn family, makers of the chilled pet food producer VIP Pet Foods, bought the company for an undisclosed sum after the administrators closed the brand's remaining 27 retail stores and made 418 employees redundant.

LONELY PLANET: When Tony and Maureen Wheeler met on a park bench in London’s Regent’s Park and decided to travel to Australia via Europe and Asia via the hippie trail in a $130 minivan, they had no idea they were setting one of the world’s most iconic businesses used by travellers around the world and that tourism would become a huge part of the global economy. As far as they were concerned, they had embarked on the journey to get it out of their system before they got a job. Arriving in Sydney on Boxing Day 1972 the couple had 27 cents and a camera between them.

Flat broke, they were approached by so many travellers asking questions about how they did it that they decided to write a travel guide based on their diaries and a business was born. The business name ‘Lonely Planet’ is from a line in Space Captain, a song by Joe Cocker and Leon Russell from the album Mad Dogs and Englishmen. The actual words from the song are “lovely planet” but Tony Wheeler heard “lonely planet” and the name stuck. In 2007, when Lonely Planet had offices in Melbourne, Oakland and London, with more than 500 office employees and more than 300 on-the-road authors, the BBC swooped in buying 75 per cent for $160.3m. It bought the remaining 25 per cent in 2011 for $42.1m. The BBC lost almost $117m last year when it sold the business to NC2 Media.

The BBC had been criticised for the original deal because its commercial arm had previously been involved in selling BBC productions, rather than buying other firms. A report by the BBC Trust found that not enough analysis was done on the potential downturn in the book market and into whether or not ‘optimistic’ online forecasts could be achieved.

ARNOTT’S: Australia’s largest and best known bikkie business was set up by William Arnott, a Scottish confectioner and pastry cook, who had 15 children with the woman he met on the 18-week journey to Australia in 1848. By the 1960s, 100 family members were working in the business. In 1985, the Campbell Soup Company took out 33 per cent of Arnott’s to help fend off a takeover offer from Alan Bond and in 1992; it bought the remainder of the company for $590m. At the time, the deal raised a number of questions about ownership of what are called 'Australian' companies, with Campbells portrayed as the predatory foreign transnational and Arnotts the local family company producing cultural icons. However, the reality is that Arnott’s lacked Campbell’s export marketing success.

BLACK SWAN:  Australia’s third-­biggest dip snack brand, Black Swan was established by Christos Saristavros, who began selling taramasalata (fish roe) dip at the South Melbourne Market 35 years ago using his family’s own recipe. Christos was murdered in 2000 in a case that remains unsolved and the company was put on the market in January 2014 January when there was a family dispute involving chief executive Con Saristavros. In June, the company was acquired by one of the Philippines’ largest and most successful food companies, Monde Nissin, buying it from receivers Deloitte for an estimated $50m.

BOOST JUICE: Janine Allis set up Boost Juice 14 years ago and developed a business that has hundreds of stores in 11 countries. The Allis family has a 25 per cent stake in the umbrella company Retail Zoo, which had a total turnover of $223 million last financial year. In 2010, private equity group The Riverside Company paid more than $65 million for a 65 per cent stake of Retail Zoo and in May this year, Bain Capital acquired Retail Zoo, in partnership with the juice chain’s founders Janine and Jeff Allis, for a sum reported to be $185m. Bain Capital and Retail Zoo put out a joint statement at the time saying the founders would remain “heavily invested in the business”.