Australian private and family business owners are about twice as likely to sell than hand over the reins to the next generation when compared to the global average, a report by PwC Australia found.
But of the 38% that want the next generation to take over, 83% do not have a succession plan in place, according to PwC's Once in a Lifetime report.
A separate study by UBS and Campden Research recently found family offices in Asia Pacific lagged behind Europe and North America in succession planning - only 13% have written plans in place, while 19.4% have no plan at all.
The PwC report noted a majority (70%) of the transitions fail and few (5%) businesses survive into a fourth generation.
Once the children take over, there is often a breakdown in communication and trust (60%), while one-in-four fail because heirs are inadequately trained.
Most family-owned companies founded by baby boomers as they enter their 50s and 60s are looking to sell either by floating the company or entering into private equity partnerships, said PwC Australia partner and private leader Sanjiv Jeraj.
There is strong interest coming from foreign investors, especially from Asia that are eyeing Australia's health, services and food business sector, he added. Many owners however, don't prepare well enough for a sale that often lead to financial or personal consequences.
The report warned of 'sudden wealth syndrome' whereby large increases in family wealth, usually accompanying the sale, can potentiality "wreak havoc on families, relationships and personal well-being."
"Preventing sudden wealth syndrome requires careful planning. Well before you sell your business, think about how you will distribute your wealth, how you might invest and spend it, and how you will pass it on to the next generation," the report noted.
Private and family businesses contribute $600 billion to Australia's GDP and employ more than three million people.