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Family business succession planning

Family business are the backbone of our industry

With almost 4,000 family businesses registered in Malta, this cluster of enterprises are truly the backbone of our industry.

This formidable percentage is not unique to Malta. According to the Ernst and Young Family Business Yearbook 2014, 85 % of all European companies are family businesses and these account for 60 % of jobs in the private sector. The report highlights that 43% of Maltese businesses have been in existence for fifty years or more compared to the global sample of 38. 7% of Maltese businesses have been around for less than 20 years.

Malta’s family businesses employ about two-thirds of the private sector workforce, and contribute more than half of the country’s value added.

What makes such type of business central to the Maltese economy is the sheer diversity of such structures. Albeit the common perception that family business tend to be small in size, this is not the case. A brief analysis shows they come in various sizes, which exposes them to a whole myriad of difficulties and challenges. It is thus safe to say that defining a family firm or a business can be a treacherous exercise. Co-preneurs (couples who have gone into business together), step-families, siblings, cousins and other family groups can form family businesses. The family may own and manage the firm, or have a stake in the family business, but no longer actively lead the organisation.


A quick study of the local economy will also indicate that a few family businesses account for a considerable share of the total turnover of all businesses and thus make a significant contribution to job retention. This is especially important in times of crisis, as well as for ongoing creation and growth, fueling the economic engines of the Island.

Family businesses also serve as the brains behind innovation, the heart behind local philanthropy, and the nerve system of our entire free enterprise system. This is often thanks to the core values endorsed by the business, whose set of timeless guiding principles, have an intrinsic value and importance to those inside the organization, its customers and society at large.


It is therefore concerning that a lot of family businesses fail in their succession planning, putting the business at risk. What leads to such failure?

Maltese Family Businesses have a similar outlook to the rest of the world, acknowledging technological advances as being the major trend that will transform business over the next 5 years. The results also tell us that for family firms competition is more intense, price pressure is growing and the speed of change continues to accelerate. Family businesses acknowledge they will have to adapt faster, innovate earlier, and become far more professional in the way they run their operations. There is a powerful 'family factor' in play that many of these firms have still not addressed, and some are even reluctant to acknowledge. The red flag here is the issue of succession - a critical area for the majority of family business owners.