SMEs & Family Businesses

SME/Family Business Succession, Restructuring and Operations Overview

CMG Consulta help family business and SME owners to create a plan to structure the business in a shape that is not completely dependent on the owner.  This structure also creates a clear distinction between ownership and management therefore creating space for owner’s children or other successors who want to work in the business as well as those who might inherit a portion of the business but not want to work in it.  When succession is considered, many family businesses work closely with their accountants and lawyers to handle the legal and regulatory aspects of the share transfer and tax.  CMG Consulta works on the business to ensure that, once the shares are transferred, the business structure and the owners’ competence and preparedness to lead are all in place increasing the chances of a successful operation post succession.

Family businesses make up the lion’s share of the businesses in Malta and these typically developed around one initial owner and possibly around the owner’s core skill.  Through time they tend to grow around the owner retaining a large degree of dependence on the owner for daily operations and management.  Consequently, the owner becomes indispensable, overwhelmed, stretched and unable to take a break.

When considering succession to the next generations, this dependence is a key blocking factor since the owner’s children might not be able to sustain the same level of technical skill to take the business forward.  In addition, there are many cases where the children might just not be interested in working in the family business in the first place.

Process of Delivery - SME/Family Business Succession, Restructuring and Operations

1. Business Status Assessment

A process to analyse the business itself and highlight its strengths and weaknesses as well the opportunities it has ahead of it and the challenges posed by the external environment. This process needs to be carried out with special emphasis on the family aspects of the business and the family dynamic.

2. Analysis of the Succession

A discussion with the owners on what succession they are thinking about and why. This process could also involve an assessment of the different family members to understand aptitudes and fit before being able to pull all the variables together and create a more complete picture of how the succession could end up.

3. Succession Preparation Plan

Based on discussions and agreement with the owners, a plan to prepare the business for succession is laid out.  This typically involves changes to the organisation structure, roles, and responsibilities.  The plan is laid out as a transition plan over a period so that, over time, the business will increase its readiness for ownership and control to change hands.  Once this plan is put into action, the actual legal and regulatory aspects of succession can be handled smoothly with the accountants and lawyers.

SME/Family Business Succession, Restructuring and Operations - Typical Clients

Family business owners who are considering the succession of their business to their children or heirs and would like to ensure that the process will take place smoothly and that the business will not suffer as a result.  In addition, family business owners who would like to reduce dependence on them, and possibly to be able to take a break, would also benefit from this service.

Family business heirs who are taking over or going to take over a family business would also benefit from this service to try to ensure that the transition will be as smooth as possible.

Benefits of the SME/Family Business Succession, Restructuring and Operations Service

Lower Dependence on Owner

Re-designing the organisation structure and creating a transition plan for the decision making and power transition will slowly bring the owner into a position that they can take a break as the business will be able to start slowly operating without depending on them for every little decision.

Clear Role Segregation Between Ownership and Management

Business owners are those who hold shares in the business while management and employees are those who are employed by the business.  A person can be both an owner and an employee or they can be just one of the two.  This segregation is important to be able to accommodate different owners who might have different outlooks or orientation towards the business.  It is also important to ensure fairness in remuneration of the different owner-employees/owner-managers depending on the actual role that they carry out in the business.

Business Prepared for Succession

Succession can be a make or break for the business as well as for the family. Carrying out a process to plan the structure, creating an authority and decision-making transition and eventually lower the dependence on owner are all at the foundations of ensuring that the business can operate into the future with new owners and without the involvement of the original owner therefore increasing the chances for success of the succession.

FAQs - SME/Family Business Succession, Restructuring and Operations

Once the SME/Family Business Succession, Restructuring and Operations Service delivery is complete and the plans are all laid out, business owners are free to proceed with the changes themselves and to build up the business to prepare for succession. Having said this, CMG Consulta are always available to support the owners and management, should this be required.
The client is free to proceed or not with carrying out the recommended changes to the business. The process itself draws up a lot of information on the business and on the pros and cons of the succession. It is normal that, if the owners’ perception does not match the information found during the process, the owners can take a decision to either maintain the status quo or even to embark on a different approach to the business depending on the case in point.