Family-owned businesses represent around 75% of all Maltese enterprises, with many having evolved through generations from small realities to fully-fledged multinationals. Over three decades, Grant Thornton has supported family businesses in planning and implementing solutions to navigate through the most challenging decisions. In this article, we will briefly analyse the most common challenges and opportunities that family businesses encounter.
Preparing for generational transition
Succession planning could prove particularly tricky as it involves drawing a very thin line between the family and business aspects. As choosing the wrong successor may prove catastrophic for both the organisation and the broader family, our business advisors place particular care in providing bespoke family business guidance and governance advice. The ultimate aim is to defuse potential conflicts in the following areas:
Grooming is another crucial aspect of succession planning. Grant Thornton can help you formulate the necessary nurturing plan for all the potential successors allowing you to obtain an appropriate comfort level concerning the successor’s competencies, work ethic, and commitment to the family business.
Identifying exit strategies
There will be a moment when one or more family members may want to exit from the business. This could be triggered by numerous considerations, be it voluntary exit, disability, incompetence or death, amongst others. By identifying and planning for exit strategies, an organization will be able to minimize disruption that may arise from a family member’s exit.
Planning for ownership succession
Letting go of their business is difficult for all owners and even more so for founders. However, in a family business the additional challenge presented by the relationship ties increases the complexity of this process. Such issues include:
Creating a resilient governance structure
The lack of proper communication is often at the root of divergence and tension resulting in the management and ownership succession processes. To this effect we advocate the adoption of family business meetings and family councils as part of our handholding in the transition process to ensure the most suiting governance set up is in place. Proper governance is key to ensure that the business and the family are well-informed, leading to an increase in the owners’ comfort and trust in those entrusted with the management.
Maltese family businesses have several financing options to consider. With the rapid pace of change in the local business scene, they are dealing with more complexity and facing new challenges in sourcing finance for their business ventures. At the same time, local financing options have increased exponentially, now also including Prospects MTF and angel investor options. One may also benefit from local or EU grants. For this reason, as an ongoing business concern looking at expanding, when it comes to raising capital, this must be done wisely to minimise the risk of collateral damage. We also don’t believe that there is one financing solution out there fitting everyone’s needs. However, at Grant Thornton we do believe that when raising funds to support business growth, one needs to be aware of all the options available. This is why we are dedicated to working with family businesses to find the right financing solution to help both your current and future needs.
There is no one-size-fits-all approach
Our solutions for family enterprises focus on aligning all aspects of the family and business, including culture, vision, mission, values, governance, ownership, leadership, communication and policy development. As there is no off-the-shelf solution to supporting family businesses, whenever a new client approaches us, our family business advisors leverage the type of business, organization size and different personalities involved in the enterprise in order to produce a plan capable of meeting the specific needs of the client, and ensure that ownership issues are dealt with in a practical and structured approach.
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