Busi­ness break­fast dis­cusses chal­lenges of fam­ily busi­ness trans­fer

The Malta Business Weekly - - FRONT PAGE -

The chal­lenges faced by fam­ily busi­nesses and their dif­fi­cul­ties to sur­vive across gen­er­a­tions were dis­cussed dur­ing a busi­ness break­fast which was or­gan­ised on 8 May by the Malta Cham­ber of Com­merce, En­ter­prise and In­dus­try in col­lab­o­ra­tion with Bank of Val­letta.

Suc­cess­ful Suc­ces­sion Strate­gies brought to­gether key play­ers and ex­perts in the field, as well as mem­bers of prom­i­nent fam­ily busi­nesses who man­aged to make the suc­ces­sion process a suc­cess.

Ad­dress­ing the del­e­gates, Malta Cham­ber pres­i­dent Frank V. Far­ru­gia said that fam­ily busi­nesses were the back­bone of Malta’s econ­omy so it was in the coun­try’s best in­ter­est to fos­ter a favourable en­vi­ron­ment for fam­ily-run en­ter­prises. Far­ru­gia said that sev­eral chal­lenges and un­cer­tain­ties must be over­come through­out the life­time of a fam­ily busi­ness, par­tic­u­larly when trans­fer­ring from sec­ond to third gen­er­a­tion and beyond.

“The pres­ence of busi­ness fun­da­men­tals such as good gov­er­nance struc­tures, re­li­able and sta­ble teams, mo­ti­vated lead­er­ship and sound busi­ness plans are nec­es­sary for ev­ery busi­ness. Tran­si­tions from one gen­er­a­tion to the next must be seam­less for the busi­ness to main­tain its op­er­a­tion and its rep­u­ta­tion – and ad­mit­tedly, this is no easy feat,” he said.

For Al­bert Frendo, chief Credit Busi­ness De­vel­op­ment of­fi­cer at Bank of Val­letta, the re­silience of fam­ily busi­nesses is what sets them apart. “Man­ag­ing the in­ter­ests of the fam­ily and the busi­ness con­cur­rently is no easy feat,” he said. “The cur­rent gen­er­a­tion in­her­ited the busi­ness from the pre­vi­ous one and its suc­cess will be mea­sured on its ef­fec­tive­ness in pass­ing on the busi­ness to the next gen­er­a­tion in a bet­ter state, rel­e­vant and valid for its time, with the po­ten­tial to grow fur­ther.”

He ex­plained that one should be pas­sion­ate about the busi­ness goals, how­ever, visà-vis the day-to-day man­age­ment of the busi­ness, a metic­u­lous ap­proach is re­quired. “It is crit­i­cal, though chal­leng­ing, to set clear pa­ram­e­ters be­tween the busi­ness and the fam­ily in­ter­ests. This is the ba­sis on which the fam­ily busi­ness is then nour­ished through good gov­er­nance and tal­ent man­age­ment.”

Speak­ing about the bank’s in­volve­ment, Frendo ex­plained that Bank of Val­letta is keen to support play­ers in this sec­tor. “It is a priv­i­lege for us to witness busi­nesses be­ing trans­ferred from one gen­er­a­tion to another. Gen­er­ally in such in­stances, one finds a bal­ance be­tween the ex­pe­ri­ence of the older gen­er­a­tion and the en­ergy brought in by the new gen­er­a­tion. Man­ag­ing this bal­ance is at the heart of suc­cess­ful busi­ness suc­ces­sion sto­ries.”

Mod­er­ated by Eti­enne Borg Car­dona, a panel dis­cus­sion fea­tur­ing three well-es­tab­lished en­trepreneurs dis­cussed the strate­gies be­hind the suc­cess of their busi­ness tran­si­tion across gen­er­a­tions.

Malta Cham­ber Coun­cil mem­ber, Liz Bar­baro Sant, who is the direc­tor of Al­berta Group un­der­lined the im­por­tance of start­ing plan­ning for suc­ces­sion early in the day. She said that for suc­cess­ful suc­ces­sion, it is im­por­tant to have valid peo­ple at board and man­age­ment level, while it is cru­cial for emo­tions to be ad­dressed and well man­aged. She also noted that pa­tience is a key fac­tor through­out the process.

Com­ing from one of the most iconic fam­ily busi­nesses of the coun­try, Louis Far­ru­gia, chair­man of Far­sons Group of Com­pa­nies, said that suc­ces­sion is not the end. He stressed the im­por­tance of fam­ily mem­bers fur­ther­ing their stud­ies, as well as for their tal­ents to be nur­tured well ahead. The for­mer Cham­ber pres­i­dent spoke about the im­por­tance of getting ex­pert hands on deck from out­side the fam­ily cir­cle, which ac­cord­ing to him made the dif­fer­ence.

For­mer Malta Cham­ber pres­i­dent Anton Borg who is the man­ag­ing direc­tor of Euro­sup­plies Ltd said that busi­nesses ought to iden­tify who the lead­ers in the fam­ily were from early on. He em­pha­sised the im­por­tance of keep­ing the best in­ter­est of the busi­ness a pri­or­ity dur­ing the process and avoid­ing the pit­falls of getting too emo­tional. Borg warned against un­der­es­ti­mat­ing the fu­ture gen­er­a­tions, as he said that it was vi­tal for them to be re­warded hand­somely in or­der to keep them in­ter­ested in the fam­ily busi­ness. A good gov­er­nance struc­ture was also im­por­tant for Borg as this pro­vided trans­parency and an arena for healthy dis­cus­sion be­tween gen­er­a­tions.

Dr Na­dine Lia from the Fam­ily Busi­ness Of­fice de­liv­ered a pre­sen­ta­tion on the in­stru­ments avail­able to as­sist in fam­ily busi­ness trans­fers.

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