Saving Australia’s "missing middle"

We often talk about the inter-generational wealth transfer as a series of shifting bank balances. But on the ground, the reality is far more practical. It’s unfolding in our industrial parks and local supply chains. While the capital is moving, a much quieter structural challenge is emerging: we are heading toward a 60,000-business ownership cliff.

The mathematics are stark. Recent data from the  Australian Business Growth Fund* suggests there are roughly 162,000 Australian businesses generating revenues between $2 million and $100 million. Two-thirds of these are owned by people of retirement age, and of that group, two-thirds have no formal succession plan.

Historically, we saw founders sell in their early 60s. Now, I’m seeing owners deferring retirement into their 70s and 80s. This is creating an immense, pent-up pressure that will hit the market over the next five years.

This fascinating topic was at the core of my discussion with xx from the Wholesale Investor for the Beyond Now podcast.

LISTEN HERE

Navigating the no-man’s land

These businesses currently sit in a dangerous "no-man's land." They are generally too large for an inexperienced management team to buy out, yet too small for traditional private equity to acquire as standalone investments. If we don’t find a new owner-operator for these companies, they won’t just "chug along.” They will be forced to shut their doors.

When a good business closes, it’s a decay of Australian capability. It fractures supply chains and forces us to look offshore for services and products we used to manage right here. It’s a shame to let a business that has survived 30 or 40 years simply disappear because it lacked a successor.

Matching capital with the right person

Capital alone cannot save a good business - it requires a person. This is where Entrepreneurship through Acquisition (EtA) makes its most significant contribution.

I see so many high-performing corporate executives who are looking for the very things a large organisation often lacks: direct accountability and true autonomy. 

They want to feel the immediate, tangible impact of their decisions. Many assume that entrepreneurship requires a groundbreaking "new" idea, but EtA flips that script. It allows seasoned professionals to buy existing, profitable enterprises and apply their hard-earned skills to scaling operations and building teams.

The need for acquisition entrepreneurs, custodians and guardians

As the EtA ecosystem matures in Australia and New Zealand, the bottleneck is shifting. We’ve worked hard to bring domestic equity capital into the space, but the most urgent constraint we now face is a lack of experienced Non-Executive Directors (NEDs).

Every new acquisition brings a unique set of challenges. These operators (often first-time CEOs) require active mentorship from a board that understands the unique pressures of the SME environment. We need "guardians" who can help navigate the human dynamics of a smaller workforce.

I’ve always believed that management is a bit like carpentry - it’s about being precise and structured. But leadership in this space is more like gardening. You have to create the right environment, fertilise the growth, and guide the operator to thrive.

If we can bridge this custodianship gap by matching corporate high-performers with legacy businesses, we can turn this demographic crisis into an era of extraordinary economic resilience.

If you enjoyed this content you can find more in-depth discussions on my podcast HERE or resource hub HERE. (And if you’re interested in learning more about the EtA pathway or the role of an NED in this space, head over to ETA Central to see the work we're doing.)

SOURCES
Australian Business Growth Fund (ABGF), At a glance: Powering the Growth Economy 2024, 

https://abgf.com.au/growth-insights/powering-the-growth-economy-2024/