Report
Paspaley pearl farm off
the North-West coast
of Western Australia
special
dynasties
set their
course
Managing a family business is rarely child’s play.
Three dynastic business heads talk candidly about
the opportunities and challenges, the pressures
and pleasures of keeping it all in the family.
words deborah light
92 Q A N TA S j u ly 201 3
g r ow i n g w e a lt h
✈ 92 f
amily business / three iconic
australian dynasties
✈ 105 Private banking / key lenders
for the big spenders
Some of the world’s greatest family companies
started out at a kitchen table, in the garage, maybe even on the back
of an envelope, and some now straddle the globe: Ford and Colgate,
Barclays Bank, Wal-Mart, Samsung and Aldi all began as family
businesses. In Australia, family endeavour was the genesis for some
of our best-known companies: Westfield, Foster’s, Arnott’s and most
major retailers, including Coles and David Jones. The businesses
don’t always stay in family hands, or even in Australia – and on average don’t succeed much beyond a generation.
Some heirs cultivate their inheritance. Rupert Murdoch built a
media empire from one small newspaper, employing three of his
children, to date. Meanwhile, the scion of another media dynasty,
Warwick Fairfax Junior, did the reverse. He took over a huge business and blew it to bits, chiefly through bad advice, amateurism and
very bad timing. Family businesses can also crumble due to lack of
interest or internal battles – the like of which we see today in the
bitter conflict among Lang Hancock’s successors.
In those companies that thrive there is typically an intense passion
and pride. Above all, there is sacrifice, not only by the founders, but
their families – willing or otherwise. “There is a deep sense of ownership, because if the business fails, the family home is on the line,”
says Peter Strong, executive director of the Council of Small Business
of Australia, which reaches some 500,000 association members.
“If the business does go under, often relationships – and health – go
with it. There is so much angst because of the enormous pressure
when things go wrong.” On the upside, you get to call the shots and
that’s a major driver, he believes.
That is obviously an attraction for many, if statistics from Family
Business Australia are a guide – family businesses account for
around 70 per cent of all Australian businesses, employing 50 per
cent of the workforce. But is being your own boss enough to balance
the downsides? Maybe not in the long term, according to research
conducted in 2011 by KPMG, which found 60 per cent of business
owners would consider selling out if they were made an offer. 
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9 4 Q A N TA S j u ly 201 3
So is it possible to handle the pressures, juggle the expectations
and stay sane and in the black? The heirs of three iconic Australian
businesses talk about being bequeathed a corporate legacy.
Stephen Keir IV
C h ai r m a n A k u b r a
When Stephen Keir looks at his office wall, three former Stephen
Keirs look back at him. “Often I look to the left and think, ‘Oh man,
I’ve got a bit of responsibility here.’” He feels their gaze as he weighs
decisions, not only for the iconic Akubra hat brand his predecessors
established more than a century ago, but for Kempsey, the country
town on the NSW north coast where his company is a major employer
with about 85 people on the payroll, turning out 160,000 hats a year
for $160 or so each. It’s also where Keir has seen firsthand what
happens when a brand decamps. “After King Gee was bought by [a
US investor], within 12 months they were being made somewhere
else and 65 people were out of a job. You notice that in a small town.
Our employees have got mortgages and their own lives to lead. You
sit back and think, ‘OK, my job is to keep this company running
photography: Yianni Aspradakis
The minority, just above 40 per cent, intended to hand it on to family
members. So make way for an avalanche. With the average age of a
family business owner 55 years (according to the KPMG report) and
some 80 per cent planning to retire within 10 years, there’s going to
be a radical change in the landscape. Among many ramifications, it
means people such as Don Manifold will be busier over the next
decade. Working in mergers and acquisitions for accounting firm
Ernst & Young, he’s typically called in when owners have made the
call to sell a business. “It’s a challenging and stressful time. The vast
majority have faced the decision: ‘Do I hand it on to my children or
do I sell it?’ Do the kids want the business anyway? Often, the answer
is no. They’d rather be having a glass of wine in Pitt Street [Sydney]
than [working] out at the family factory in Parramatta.”
Either way, don’t delay. “You should be preparing for sale for two
or three years beforehand,” Manifold advises, “driving earnings,
working on management structure, looking at the balance sheet and
tax arrangements.” Likewise, if you choose to hand it over to the kids.
“Those discussions should happen when the patriarch or matriarch
is in their early 50s rather than older, when there is less ability to
communicate openly about the transition and who’s getting what.”
But that’s not always easy, he says, “There can only be one CEO.”
profitably, but also to keep it in Australia.’” This sense of duty spreads
beyond his locale. “Australians have passion for our brand names.
My father was passionate about the brand, as my sisters and I are.
You feel like custodians of one of the last iconic brand names in
Australia. There’s a fair bit of pressure in that.” He’s laughing, but
admits he sometimes feels the strain. “A lot of Australian brands
have gone overseas [among them: Speedo, Vegemite, Foster’s and
Arnott’s]. You hear people talk about Akubra and it hits you what
your responsibilities are. The name has been here for more than 100
years and there’s a lot of pride in it.”
In recent years, it’s been challenging. Like many other employers,
Akubra is feeling the pain of doing business in a climate of rising
labour and power costs – but there’s another pressure peculiar to this
endeavour: the cost of the chief raw material – rabbit skins – which
has rocketed by 125 per cent in the past three years due chiefly to
the calicivirus disease that has devastated the Australian rabbit
population. The rabbits may be coming back, but the shooters never
returned in sufficient numbers. Now Keir is forced to import the furs
from such places as Kiev in the Ukraine.
On his board, along with himself and sisters Stacey and Nicola, are
two longstanding independent directors, of whose contribution Keir
Hat tricks: Stephen Keir IV (opposite page) and his family
company’s Akubra hat factory in Kempsey, New South Wales
says, “It’s a big plus because they have quite a different perspective.”
He also values the input of others he has met through Family Business
Australia. “I’ve talked to people in exactly the same position as me
and you can offload about things such as the costs of doing business.
I’m not on my own.”
Since their father’s death last year, Keir says of himself and his
sisters, “We’re all just finding our feet. Dad had a pretty good succession plan in place and we’re adhering to his wants. We’re trying to get
that balance, making sure that everyone’s open and honest and we
all know what’s going on so we’re all on the same page – because once
you lose any trust, you’re struggling from then on.” Of course, there
are occasional strains. “There wouldn’t be a family business out there
that wouldn’t have moments when there’s tension because someone
doesn’t agree with what someone else is doing. It’s good for you. I’ve
made mistakes in my time and you need someone to tell you you’re
not always right.” Their father also ensured the Keir siblings didn’t
need to tap into the company’s coffers for funds by establishing an
investment fund two decades ago. “If we ever need money to build 
j u ly 201 3 Q A N TA S 95
Family business special report
I took such pride
in what my father
had achieved. he put
everything into
that vision
Marilynne Paspaley
Di r e c t or Paspa l e y Pe a r l s
You go into a family business for reasons other than the
usual accomplishment or reward, according to Marilynne
Paspaley. “There’s a desire to be connected and to do something together,” she says. “Then when your children decide
to come in there is a passing-on of knowledge and a pride in
seeing their passion and desire to be a part of it. The bond
and the purpose of doing it together are actually more important than the achievement sometimes.” Like her older sister,
Ros, she was never expected to follow their Greek father
96 Q A N TA S j u ly 201 3
Marilynne Paspaley, a director of
Paspaley Pearls; jewellery atelier
workshop, Darwin (left)
Nicholas Paspaley into the family pearling
business. They were girls, after all. But both did,
joining their brother Nick, who went on to develop
the cultured South Sea pearl industry. Several of
this generation’s children now work in the business, which encompasses 20 pearl farms and
associated industries including marine engineering, air transport and a major property arm.
As much as she treasures the intimacy of that family bond, Paspaley
admits it can be a liability. Asked about the drawbacks of joining a family
company, she says, “You don’t always get rid of the birth order. If you’re the
youngest [she is], you’re still the youngest.” A successful actor, Paspaley was
persuaded by her siblings to establish a retail arm, beginning with a store
in Broome. That’s when she realised pearling was in her blood. “It just came
out. I was like a missionary. There was so little understanding of this extraordinary gem – people thought Japanese pearls were the best. I took such pride
in what my father had achieved. He was really the initiator of the pearling
industry in Australia and he put everything into that vision.”
Working towards that vision meant, “Everything went into the business
to keep it going.” It also meant no family holidays for five years. “Darwin was
a hard place to live,” she says of her childhood. “There were no little niceties.”
Life might be more comfortable today, but any family member who joins
the business begins at the bottom. “All the children have to work on the ships,
even the girls. My first son, Nick, spent seven years on the ships. All of them
do a minimum of one year to understand what the business is about, the
people who work with us and what their conditions are like; how it all works,
from skippers to deckhands to the people in the grading room and jewellery
workshop. [It is important] to understand how difficult it is to grow these 
portrait: george fetting
a new factory, we’ve got the money [set] aside. That
was the plan – to keep Akubra safe.”
Asked if he ever felt the burden of destiny growing
up, Keir remembers his father sitting down with him
when he was 17. “I didn’t know what I wanted to do
and he said there was no pressure to come into the
business, but it’s there if you want.”
Keir did an accounting course,
played rugby union and stretched
a gap year into two. “Then I went
home and haven’t looked back. It’s
been hard. I’ve been there 23 years,
but I’ve spent 15 years on the factory
floor.” He’s had a similar chat to his
own son, another Stephen, who is 16
and – as he was – unsure what he
wants to do. The elder of Keir’s two
daughters shows “a fair bit of interest” and Keir has four nieces and
nephews who may choose to come
into the business, although, “It’s not
a huge company so there’s not, say,
10 different management jobs. One
day it’s going to come down to who
has the best qualifications. They’re going to have to do the
hard yards, like every generation before them.” Keir has time
to work on issues such as succession because he’s just 43.
What he’s not getting is sleep. “My father had a unique way
of coming home and letting work go. I wish I knew his trick
because I toss and turn. I worry about it all the time.”
special report family business
that’s how you learn.
i was always wrong and he
was always right. we agreed
on that, so it was fine
Sandy Oatley with
six-time Sydney-Hobart
winner Wild Oats XI
pearls. The shells have to live in an environment as natural as it can possibly
be, a pristine environment and that’s how you must preserve it.”
Paspaley stepped down as executive director of retail in 2006, to move into
hotels. “It’s an incredibly difficult thing to do in this country,” she says of such
hurdles as high labour and construction costs, and the until-recently soaring
Australian dollar. She has three upmarket hotels in the Kimberley under the
banner of Pinctada Hotels & Resorts.
Marilynne remains a director of Paspaley, with her siblings, and their board
meetings are attended by other family members in the business. “It’s a better
way to communicate what’s going on.” There are no independent directors.
“We just haven’t felt the need.” Family tensions are settled informally. “We
get together, generally in the boardroom, and talk it through until there’s a
consensus. The family has the ability to overcome issues more easily without
interference from any other party.” Among 800 employees, there are many
non-family members, some at senior levels, and others who’ve worked there
for decades. “Selection is really important,” she says of hiring outsiders. “They
have to fit. With a family business, it’s never hands-off, you’re always going
to have an opinion about what they’re doing, so they have to be strong. Often
they bring skills you don’t have because they’ve had another career path.”
Of those among the next generation who join the enterprise, Paspaley says,
“It’s not something you’re obliged or expected to do. You must decide you
want to be a part of it because that’s when it becomes the bond. If you want
to be a part of it, you have to work for it.” Her son Nick is in the property side
of the business, while second son, Chris, works in retail. The youngest, Milan,
is a diver on the pearl farms when he’s on university leave. Now their cousins
Clare and Christine are working on the next generation. “A number of my
nieces are having babies. They’re doing very well at bringing up the next
board, by the look of things.”
Sandy Oatley
portrait: andrew goldie
E x e cu t iv e c h ai r m a n Oat l e y b u si n e ss e s
One advantage of being a family company is not having to mollycoddle a
mob of shareholders. “You can respond quickly to a market change or take
an investment risk because of your intimate knowledge of the business,” says
Sandy Oatley, executive chairman of the Oatley family interests, which
encompass tourism, wine, cattle, property and associated ventures.
On the downside, being sacked every other day by your father can’t have
been fun. “You just turned up the next day and got on with it,” he says of his
informal apprenticeship. “That’s how you learn. I was always wrong and he
was always right. We agreed on that, so it was fine.” No other career; no
tertiary education was considered for or by Sandy Oatley. “I was taught by
my father and I wouldn’t change it for anything,” he maintains.

j u ly 201 3 Q A N TA S 9 9
Family business special report
The enterprise his father, Robert, founded, which Sandy has helped
nurture and diversify, now employs some 1500, among them several
of Robert’s grandchildren including Sandy’s younger daughter,
Nicky, who is now brand manager for Hamilton Island in the Whitsundays, one of the Oatley family assets. (His elder daughter, Lyndal,
is an Olympic-class equestrian, living in Germany.) Two nephews
are also in the business: James in graphic design and Robbie in
finance. Robert, at 85, is in the office four days a week, and Sandy
welcomes that. “He’s a wise mentor.”
The foundation of much of the family’s eventual wealth was a
Hunter Valley vineyard that became Rosemount Estate. The teenaged Sandy and his younger siblings Ian and Ros helped plant the
vines, burying cuttings from the boot of the family’s Kingswood
while their mother drove. “Dad always felt that doing things from
the ground up was the way to learn about anything,” he recalls. Same
applies to the upcoming generation. “You can’t just walk in at the
top; you’ve got to understand what makes the business tick. We like
them to work through the ranks so that they earn respect. They grow
up with their colleagues and learn from them.” His daughter Nicky,
for example, who “got the bug” like he had, trained and worked in
hospitality outside the company before starting in Hamilton Island’s
reservations department. The board also gets a say here, and it
includes two independent directors. “It has to approve these appointments and can be quite critical of family members coming forward.”
Not that there’s been any grief because none of the upcoming
generation is yet old enough to cause it, Oatley says.
The transformation of the family business began when Rosemount
Estate was sold in 2001 to Southcorp for $1.5b. Two years later, the
Oatleys bought Hamilton Island, reportedly for more than $150m,
then spent some $350m bringing it up to scratch. They re-entered
the wine business in 2006 under the Montrose, Robert Oatley and
Wild Oats labels – the latter named for Robert’s ocean-racing maxi,
six-time winner of the Sydney-Hobart. Meanwhile, the family has
established the largest commercial Charolais cattle herd in the
country, selling chilled beef, largely to Japan.
When there’s need for extra capital, “We try to self-fund it and we
have a good relationship with our banks.” The GFC’s impact on share
market and property investment didn’t help. “It’s been fairly stressed
with the development of Hamilton Island because we reinvested
a lot of money there. If we weren’t a family company, our vision 
Family business special report
The family figures
F
amily businesses account for about
70 per cent of all Australian businesses
A
verage turnover: $12m per year 3
A
verage number of employees: 372 2
E
stimated wealth of the sector: $4.3 trillion 3
8 1 per cent of owners intend to retire in the
next 10 years, generating a wealth transfer
of $3.5 trillion 3
A
verage age of family business firm: 32yrs 2
A
verage age of family business owner: 55yrs 2
A
verage tenure of family business CEO: 17yrs 3
4 1 per cent intend to pass business to family members 1
6
1 per cent of owners would consider selling
if approached 2
4 4 per cent of owners are planning to sell 1
Sources: (1) KPMG & Family Business Australia Survey of Family
Businesses 2009 (in conjunction with Bond University) (2) MGI
Australian Family & Private Business Survey 2010 (with RMIT University)
(3) MGI Family & Private Business Survey 2006 (with RMIT)
for the island wouldn’t have succeeded; shareholders would have said no.” The
second wine venture has also taken patience. “It’s a long haul, but the wine business
has been good to us in the past and will be in the future. Again, it’s a quality product
that wins through.”
Oatley is an advocate of outside directors on family boards and outside expertise
in senior positions. “You need someone to ground you because young heads do get
wild ideas. You need someone to pull on the reins, to make sure that all the boxes
have been ticked – you can’t be an expert at everything. We have professionals running Hamilton Island, the wine business, the vineyards, the cattle and also, with our
investment portfolio, we use investment advisers.”
For senior non-family employees, he concedes it can be tricky. “It probably makes
it harder for some of them, knowing these kids are coming forward in the business
and might take their jobs.”
At the age of 61, Sandy still has a long time yet at the helm, if his father’s track
record is anything to go by. On possible successors, he wonders, “Who knows what
they will want to do in the future?” He admits to having qualms when his daughter
Nicky joined the family business, paradoxically because she shows the same passion
for it that he has. “The worry is that it becomes all-consuming. You get obsessed,
that’s one of the downfalls. When you go home you’re always thinking about it and
how to make it better. The business does possess you.”
c