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Succession and its alternatives – summary of discussion panels

FAMILY BUSINESSES IN POLAND

Most companies in Poland are family-owned. The concept of the family business is relatively new, as its history in Poland began on a large scale about 30 years ago, with the changes in the political system.

The success of many family businesses, including those which we find among the largest companies in Poland, the growing awareness and economic patriotism of the Polish society resulted in the fact that businesses with family roots were no longer associated with the myth of a private operator created in the Polish People's Republic. This is confirmed by the results of successive reports from the series of Poles on Family Businesses prepared by Family Businesses Foundation (FFR). The first one, published in 2014, opened the eyes of entrepreneurs who were then uncertain about the social climate around family businesses and gave an impulse for greater boldness in communicating this specific aspect of companies.

THE GROWING ROLE OF FAMILY BUSINESSES

The growing role of family businesses has been recognized by various institutions providing services for business, starting with banks, through law firms and ending with consulting firms. – For some time now, family entrepreneurs have been experiencing a kind of sales offensive, when practically every professional provider of services for business offers them dedicated solutions – notes Piotr Hans, advisor to the management board in the NOVOL family company, member of the Main Board and the Management Board of the Wielkopolska Branch in Poznań of the Association of Accountants in Poland (SKwP). In some of them, there has even been a shift away from external advisors, although the number of entrepreneurs who will need help in gradually transferring leadership to the younger generation is increasing year on year. The problem is that we do not know who to choose because the subject of company succession is relatively new and practically no one has many years of experience, which is particularly important in the case of small and medium-sized enterprises, where the practice of using the support of external advisors is generally small – adds Hans.

SUCCESSION - PROBLEM OF DIFFERENCES OF OPINION AND EXPERIENCE

Today, in most cases, we are dealing with the first generation – the people who have created and continue to manage the family businesses. This generation is becoming a pioneer, gradually transferring its life achievements to the hands of successors. It is a difficult process, requiring many years of preparation and hard work. Representatives of two such different generations often perceive the challenges faced by them and the company in a different way. They also define priorities differently. Owners of long-standing family businesses usually have one vision for the future of their business – to put the achievements of their lives in the good hands of another member of their family. It is ideal if the family members know the company and participate in its life and development. It is worse if they do not have sufficient knowledge about it or if they do not want to or cannot associate their future with managing the company in subsequent years.

As the owner of a company, regardless of its size or history, you should take care of its future in advance. Life is full of surprises, also those unpleasant ones, so every entrepreneur should have a “plan B” even in the event that the company suddenly loses its owner and the family has to cope with the burden of running it on their own.  Such dramatic situations usually happen at the least expected moment and securing the entrepreneur’s family and the achievements, customers, suppliers and employees of the company is very important.

A family business is more than just a source of income

This is the fruit of hard work over many years which no entrepreneur wants to waste. We are fully aware of this, therefore, in cooperation with several entities, we decided to organize free discussion panels on succession and its alternatives in several Polish cities: Poznań, Łódź and Szczecin, in order to indicate to the owners of family businesses what they should do to ensure the best possible care for the future of the company and their family. At RSM Poland, acting locally and globally, we promote family businesses and wish to broaden the knowledge of the public about them because these enterprises are one of the most important links in our economy, building their strategy on tradition and good values.

A good plan is the key

Succession is generally a lengthy and legally, fiscally and financially complex process that can take many years to complete. If you want to feel safe and at the same time provide safety to your loved ones, you need to have an emergency plan in place that is not easy to prepare, especially in view of many responsibilities that arise from running a business. The discussion panels organized by us were supposed to show the entrepreneurs how to create such a plan and where to look for support.

PRACTICAL APPROACH TO THE SUBJECT - DISCUSSION PANELS

During our discussion panels, we focused on the subject of succession, and more specifically on the model of handing over power from parents to their children. In this model, children have been (actively or only as observers of parents' activities) involved in the company since its creation and want to bring added value and a breath of freshness and innovation to the company. We also discussed situations where the family is not the only owner of the business, as it often happens that a company is listed on the stock exchange and the co-owner is an investment fund or the company is managed by external managers. We also talked about situations where children are not interested in running a family business, or vice versa, they are interested but it is hard for the parents-founders to pass the baton.

The panels were attended by experienced speakers who themselves (to a large extent) went through the process of succession in their companies thanks to which they could share their experiences with the participants, they also talked about their challenges, successes and failures. We focused on the financial, tax, legal, business and organizational aspects of succession. We drew attention to psychological problems (the transfer of power, acceptance of successors by the family and company, handover of power by doyen) and showed how an investment fund can help family businesses to develop or succeed. We discussed what can/should be done if succession proves impossible or too risky (e.g. selling the company or handing it over for management to hired managers). In addition, we discussed how to create an atmosphere in a family business that will allow employees to feel part of it and we talked about the problems of key employees, such as Chief Accountants or Financial Directors employed in a family business, that arise in the face of succession.

We have devoted a lot of time during the panels to the issue of the right approach, emphasizing that each family business is different and each has a different idea of the future it wants to take care of. – Selling, entering into discussion with a financial or industry investor as a potential owner, donation and, in the case of large entities, also going public, all of this is included in the catalogue of transformations possible in the case of a planned transfer of ownership in the succession process, but each of them requires a different approach because each company is different” – points out Bartosz MIŁASZEWSKI, our Managing Partner.

TO SUM UP

You have to think about the future, but you do not need to worry about it.  The owners of family businesses think about what will happen to the fruit of the hard work of many generations almost every day, we know this very well because we represent a group of these businesses.

Creating a multigenerational succession plan is not an easy task which is why RSM Poland helps both doyens and successors to plan the right succession in advance, guiding them through the entire process from beginning to end.

How can we help you?

Contact us by phone +48 61 8515 766 or submit your questions, comments, or proposal requests.

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