Business
20:01 5 September 2018
Post by: WBJ

Challenges for family businesses

According to the Polish Institute of Family Business (IFB),90 percent of Polish companies surveyed are owned by families and private individuals. But only 36 percent of that 90 percent recognize themselves as a Family Owned Business (FOB).

In Poland, the definition of a family business is relatively new and not yet well defined. This is the result of the fact that the boom in family businesses started around 1989, when political changes and the drive of private owners to achieve success enabled them to create prosperous businesses. That is why in the Polish economy nowadays we only have the first generation of founders of family businesses. They have become forerunners in passing their businesses onto successors. It is worth noting that every fifth company listed on the Warsaw Stock Exchange began as a family business. FOBs have great potential and should not be viewed as small, non-innovative and non-competitive. They may sometimes be reluctant to accept the risk of scaling up the business to enter into big-player territory, but often family-owned businesses are the key players in their market. The difficulty of the process is amplified if the FOB founders do not have successors or the successors are not interested in running the business, as they see their life taking a different direction rather than following in their parents’ footsteps. In our experience, it is a very common situation and also the main threat to FOBs established in the early 1990s. There is a great number of prosperous FOBs who are forced to look for an alternative to succession. They needn’t worry, however, because they have multiple options. The owner can sell the business to a competitor or a strategical investor by selling part or the entire enterprise. One can also develop a strategy where they are partially involved in the business and the majority of shares are in the hands of private equity or another investor, making the family passive shareholders living off dividends. These and other options are available to FOB founders/owners who are interested in alternatives to succession. In order to select the right path of how to deal with their own business, it is highly recommended to find a good and trusted advisor who specializes in mergers and acquisitions, understands succession issues and who can help the owner to prepare the business for sale in all respects, find an investor and support the owner throughout each stage of the transaction. Working closely with FOBs on a daily basis, we see how valuable they are. They are one of the most important gears of the Polish economy, with a strong base and huge potential. They are flourishing businesses built on quality, tradition, trust and values. That’s why they represent viable investment opportunities, allowing them to further prosper and grow in a market that they know well.


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