Picture this: You’re sitting at Café Cordina in Valletta, sipping on a strong espresso. Across the table, your uncle, the current CEO of your family’s successful export business, breaks the news – he’s ready to step down. The weight of succession lands on your shoulders. But where do you start?

Understanding the Dilemma

Malta’s business scene is a mix family-owned enterprises, with many facing the same challenge. According to a study by the University of Malta, around 60% of Maltese businesses are family-owned, and about 40% of these are in their second generation or more. Succession planning is a critical issue, yet many families struggle to address it effectively.

Common Dilemmas and Solutions

Choosing the Successor

One of the most common dilemmas is choosing the right successor. It’s not just about who’s next in line or the most qualified. It’s about finding someone who understands the family’s vision, values, and the unique dynamics of the business. Some families opt for external candidates, while others prefer to groom an insider. The key is to make an informed decision based on the business’s long-term needs and the candidate’s strengths.

Communication and Transparency

Open communication is crucial during succession. However, many families struggle to have these conversations. They fear causing friction or damaging relationships. But avoiding the topic can lead to misunderstandings, resentment, and even business failure. Regular family meetings, led by a neutral third party if necessary, can help facilitate open and honest discussions about the future of the business.

Preparing the Next Generation

Grooming the next generation is not just about teaching them the ropes of the business. It’s about helping them develop the skills and mindset needed to lead. This could involve mentoring, formal education, or on-the-job training. Some families even send their successors abroad for international exposure. The key is to provide a well-rounded preparation that equips them to face the challenges ahead.

Managing Expectations

Succession often brings high expectations and intense pressure. The successor may feel they have to live up to their predecessor’s legacy, while the predecessor may struggle to let go. Managing these expectations is crucial. It’s important to set realistic goals, celebrate small victories, and encourage a healthy work-life balance.

Local Initiatives and Support

Malta’s government and private sector have initiatives to support family businesses during succession. The Malta Enterprise Corporation offers advisory services and funding for succession planning. The University of Malta’s Institute for Family Business provides research, training, and networking opportunities. Local business associations also host workshops and seminars on succession planning.

Succession is not a one-time event, but a process that evolves over time. It’s about creating a sustainable future for the business and the family. As you sit there at Café Cordina, looking out at the Grandmaster’s Palace, remember that the future of your family’s business is in your hands. With careful planning, open communication, and a commitment to grooming the next generation, you can ensure that your family’s legacy continues to thrive.

“Succession is not just about who’s next, but what’s next. It’s about the future of our family, our business, and our contribution to Malta’s economy.” – Joseph Portelli, Chairman, Portelli Group