Creating a legacy of value for Malta’s family businesses

Small and medium-sized businesses make up a majority of Malta’s economic output and are responsible for most of the jobs available in the country. Many of these firms are family affairs, bringing with them their own set of benefits and challenges that need to be considered on their terms, for the good of the business and the country.

The Family Business Office is tasked with doing just that, and since 2017, has been the main point of contact between this major economic force and the Government.

Since being re-appointed as regulator for the period between 2022 and 2025, Dr Gerada has wasted no time in doubling down on the entity’s efforts to support local family businesses.

For starters, he reports that the new Family Businesses Grant offered by Malta Enterprise has seen encouraging take-up.

“The main objective of these support services is to assist family businesses as they pass the business to the next generation during the life of the owners.”

The grant allows such businesses to make use of advisory or mediation services worth up to €15,000 over a three-year period. Unlike similar grants offered by other Government entities, the Family Businesses Grant does not limit applicants to a list of state-approved mediators.

“In our case, we thought about doing that, but we realised you can have situations within family businesses that are quite delicate, and the family will not be likely to trust just any professional to advise them.

“For this reason, we left the choice of the professional open to the family business – as long as it is a warranted professional the family trusts, we will accept the application”, explains Dr Gerada.

The Family Business Office is now teaming up with the Mediation Centre to train mediators in Malta, so that they may be better positioned to provide mediation services to family businesses.

Another fruitful partnership that the Family Business Office is keen on deepening is with The Malta Chamber and its Family Business Committee.

This collaboration led to the creation of a series of specialised training sessions for family businesses carried out throughout 2022. These sessions included a mix of lectures, individual interviews, and group discussions.

They tackled a variety of topics, from the particular elements that make family businesses distinct from other types of businesses, to the benefits of restricted or shared control.

The course also provided a template business owners could us to determine a decision-authority matrix – to see where and by who each type of decision should be made – and a governance framework families could adapt to their own business.

The course is available in its entirety on YouTube.

The collaboration with The Malta Chamber’s Family Business Committee continued with a survey that received input from over 120 respondents. The survey sought to understand the current field of play in terms of family businesses’ future-readiness by obtaining a snapshot of the processes respondents have in place to ensure their long-term survival.

The results, shared in an event held in February 2023, were equal parts encouraging and concerning. The survey found that 17 per cent of family businesses do not have a functioning board of directors, and that almost all of these businesses do not have a written strategic plan. In addition, only a third of all family businesses have a written succession plan, a vital component in the long-term success of any family business.

At the time, Dr Gerada noted that although “family businesses locally have developed, and some have grown to become great businesses over the years, it is also clear that this growth requires planning ahead, and this is one aspect that family businesses must focus on. This is what we mean by charting your course – it is ensuring the continuity of your business and its continued success.”

A follow-up to this survey will be carried out later in 2023 by the Family Business Committee within The Malta Chamber.

“Focus shall now be on seeing how to address the areas where family businesses are in need of assistance,” says Dr Gerada.

In a bid to improve family businesses’ competences, the Family Business Office is also planning to launch a certification initiative, with the objective of recognising achievements of family business in various areas of importance, such as succession planning and good governance.

In the meantime, it is engaging in ongoing outreach with the family business community, including through a series of informative articles aimed at helping them broaden their horizons, overcome current challenges, and plan ahead.

In an exciting development for Malta, the landmark Transeo summit, dubbed “the reference event in Europe dedicated to transfers and acquisitions of SMEs”, will be held in Malta in October 2023, in collaboration with the Family Business Office.

The event brings together business transfer professionals from around Europe, including merger and acquisition (M&A) advisors, intermediaries, brokers, lawyers, auditors, private equity firms, and also EU, national, and regional policymakers and decision-makers.

Dr Gerada says: “This is the second time that Transeo has chosen Malta to hold its annual summit. The first time was during Malta’s EU Presidency back in 2017. We now look forward, with great anticipation to this year’s summit where we shall be discussing Family Businesses, their struggles with business transfers and solutions that may be at hand through the Transeo platform and Network.”