Family Business Succession Workshop - Transeo European …...European Family Businesses – Jesus Casado 3. Marcel Grosbusch & Fils – René Grosbusch ... •Reform of Belgian law

Family Business

Succession Workshop

Content

1. Introduction – Vincent Molly

2. European Family Businesses – Jesus Casado

3. Marcel Grosbusch & Fils – René Grosbusch

4. Malta Family Business Act – Nadine Lia

5. Panel debate

• Accountancy Europe – Edelfried Schneider

• Muller & Associés – Jacques Hirtt

6. Q & A

1 Introduction

Business Transfer

1. Introduction 1.1 Insights from Belgium

Source: Lambrecht & Broekaert, 2018

When will the company be transferred?

Management Ownership

Within 5 years 29% 24%

Within 10 years 21% 21%

Not applicable within 10 years 26% 23%

No idea 24% 34%

Business Transfer



Who will take over (if succession within 5 years)

Management Ownership

To my kids 62% 54%

To external persons 27% 32%

To non-family employees/managers 11% 5%

To my children-in-law 8% 0%

No idea 5% 6%

Biggest Obstacles

Succession planning:

1. Financial reasons (ownership) 2. Family reasons (ownership + management) 3. Economic reasons (ownership + management) 4. Incumbent does not want to hand over (management) 5. Other


Source: Antwerp Management School, 2015

Most important advisors (top 5)

1. Accountant 2. Business transfer advisor 3. Notary 4. Lawyer 5. Other entrepreneurs / business owners

1. Introduction

Source: Vlaio, 2017

1.1 Insights from Belgium

Most important issues (top 5)

1. Human aspects 2. Legal aspects 3. Financing aspects 4. Fiscal aspects 5. Valuation aspects

1. Introduction


1.1 Insights from Belgium

Business Transfer

External Ownership

Family Management

Non-family Management

Family Ownership

Family Management

Family Control

1. Introduction 1.2 Succession Alternatives

How to transfer ownership?



How will the ownership be transferred (if succession within 5

years)?

Sale 42%

Gift 28%

Not clear yet 17%

Combination of sale/gift 16%

Increasing trend: Search Fund


Source: IESE Business School, 2016

Student successors

• 1 out of 3 considers taking over the family business • 63% expects to take over within 5 years at the earliest • The better the performance of the family business, the

higher the intention to become successor in the future • Family harmony > continuity of the business

1. Introduction 1.3 Transfer over generations


Intergenerational differences


Source: Molly, 2009

Wealth Preservation

Wealth Creation

The founder’s shadow


Source: Kammerlander et al., 2015

Strategic change and innovation

• Strategic change: • Conservative • Rebellious • Wavering • External and internal fit

• Innovation: • The young generation as driving force • Co-creation over generations


Source: Miller et al., 2003


1. Introduction 1.4 Emotional challenges

Unspoken emotions will drive

business (transfer) decisions

• Typical difficult subjects:

Remuneration, entrance and promotion family members, ownership, treatment of family members

• Deeper underlying emotions:

Feelings of being neglected, need for parental love, lack of trust, favouritism, impartiality

• Importance of communication

1. Introduction 1.4 Emotional challenges

Inheritance taxation

1. Introduction 1.5 Tax and legal challenges

Source: EY, 2017

Hidden taxation

• Capital gains tax (e.g. Austria, Canada, Norway) • Real estate transfer tax (e.g. Austria)

Other

• Gift taxation in Flanders: from 3% to 0% for family firms • Reform of Belgian law of succession

1. Introduction 1.5 Tax and legal challenges

Source: EY, 2017

1. Introduction 1.6 Valuation challenges

Pricing by exit path (discount to estimated market value)

Intended Actual

Sale to other firm 11% 22%

MBI 17% 26-30%

MBO 26% 26%

Sale to family member(s) 50% 42%

Emotional pricing

Source: Kammerlander, 2016

How much is my business worth?

• Overvaluation of the business • Limited insight into business valuation (Vlaio, 2017) • Not actively and timely influencing the factors that impact

business valuation • Flanders (Unizo & Antwerp Management School):

1. Introduction 1.6 Valuation challenges

1. Introduction

Prof. dr. Vincent Molly

[email protected]

Thank you

mailto:[email protected]


2 European Family Businesses

Jesus Casado

3 Marcel Grosbusch & Fils

René Grosbusch

3. Marcel Grosbusch & Fils

3.1 Grosbusch today

4 generations

• 1917 • Jean-Pierre

• 1969 • Marcel

• 1975 – 1982 • René – André

• 2012 – 2018 • Lynn – Goy


3.2 Grosbusch people in 2018

260

employees

410

suppliers

+ 1800

active

customers

Operating

24/7


3.3 Grosbusch international in 2018

Operating in

Luxembourg and

the greater

region

Importing via truck, boat

and air cargo

Many

languages

spoken

Internationl Exports

to other continents


3.4 Grosbusch logistic in 2018

Up to more

than 1000

daily

deliveries

40

trucks

56

loading docks


3.4 Grosbusch logistic in 2018

400 organics

references

1400

references

18 000 sqm

depot

Maturation

chambers


3.5 Grosbusch prepack in 2018

975 000 trays and flow-pack

per year Since 2003


3.6 Grosbusch fruit at office in 2018

+70 000 boxes

per year

Since 2008


3.7 Grosbusch Fresh’Cut in 2018

134 000 shakers

per year

20 tonnes

per week

Since 2010


3.8 Grosbusch Zummo in 2018

Since

2016


3.9 Grosbusch Cenrtifications in 2018

9 certifications


3.10 Grosbusch news in 2018

Cooking

workshop

Aquaponic

greenhouse

Orchard of

1000 trees

Fruits & Vegetables

mascots


3.10 Grosbusch news in 2018

Auditorium Specific training for

fruits & vegetables

professionnal

people

Certified

diploma


Thank you all for your attention

4 Malta and the work it has undertaken

to assist family businesses

Dr. Nadine Lia

• José Manuel Durão Barroso, Former President of the European Commission

“Family firms are crucially important for Europe. They make a significant contribution to Europe's GNP and employment, and tend to be great innovators, with a longer-term vision. They also tend to be firmly rooted in their regional and national culture, displaying the sort of European values that we all share.”

• EC Guidebook

Creation of a transfer-friendly regulation framework: To help the transfer of businesses means having the right regulatory framework. The European Commission dealt with this area in its recommendation on the transfer of small and medium-sized enterprises. It invited the Member States to improve their legal and fiscal environment for business transfers. Some progress has already been made in implementing the recommendation, but there is still work to be done.

• Miżura 120 ta’ 2013

Se jiġi indirizzat L-Att tan-Negozju tal-Familja. Il-liġi se tagħti definizzjoni ċara ta’ x’inhu negozju tal-familja u min huma l-membri tal-familja u se tinċentiva t-trasferiment tan-negozju bejn membri tal-istess familja. Kull negozju tal-familja rreġistrat taħt dan il-Att se jkun eliġibbli sabiex japplika għal numru ta' benefiċċji.

4. Malta Family Business Act 4.1 The Journey Began…

4. Malta Family Business Act 4.2 Family Businesses in Malta

• More than any other Member State, Malta’s economy depends on its SMEs which have so far weathered the economic crisis well.

• Around 98% of all businesses are micro, small and medium sized enterprise with the vast majority of them being family run businesses.

• 95% of these SMES are classified as micro enterprises having less than 10 employees and provide about 80% of all jobs in the business economy and create 71% of the overall value added.

• For both variables, this is about 14 percentage points more than the EU average.

4. Malta Family Business Act 4.2 Family Businesses in Malta

• Last year more than 80% of family businesses in Malta reported an increased turnover over the past 12 months.

• 60% of family businesses surveyed generating an average of 24% of turnover from overseas markets, and as many as 52% of family businesses recognised the importance of establishing new entrepreneurial ventures.

• In the past 3 years Malta has doubled its economic growth, reduced unemployment to the lowest figures in history, registered the highest investment rates and lowest deficit and national debt figures.

• Pre Consultation

Direct consultation with over 40 stakeholders and public consultation with the general public

• Committee

Public and private sector stakeholders meeting weekly for a period of a year

• Further Consultations

Audit and Legal firms Firms; Review of local and international legislation; EU Commission DG Enterprise and Industry; Meetings with local and foreign family businesses; University of Malta Faculties of Law, FEMA, Sociology and foreign Universities.

• Draft Bill

White Paper – Public Consultation, Review of Bill, Attorney General, Cabinet, State Aid Monitoring Board, Parliament.

4. Malta Family Business Act 4.3 The Journey Began…

4. Malta Family Business Act 4.4 Surveys

Quantitative

• National Statistics Office commissioned to specifically to gather key data on family businesses from amongst its business register.

• 2,500 businesses in Malta were targeted. • First recorded official statistics in the EU on

family businesses. • Most family businesses employ between 2-5

family members.

• Nearly 83% would opt to transfer the business to the next generation

• The major challenges faced were: o Taxation issues; o Financial problems; o Succession challenges and risks; o Family governance arising from conflict and

retirement uncertainty.

• Ministry for Economy cooperation agreement on SMEs with the Department of Sociology at the University of Malta.

• Researcher carried out direct interviews with

micro, small, medium and large family businesses.

• The researcher provided qualitative data and served as a basis for the NSO survey which they assisted in developing.

• Research themes: o Continuity and succession planning; o Structure – general, management and

ownership; o Gender and maternity; o Difficulties accessing the field; o Episodes when the family aspect featured

strongly; o Strengths and weaknesses of being

involved in a family business.

• Malta was one of the few member states who won EU funds on the basis of the official legal definition of a family business Malta has adopted.

• This will make Malta one of the very few EU

Member States to have obtained official statistics on family businesses, and the first to have been able to carry out a survey based on legislation.

• Final report indicates that nearly a third of

respondents are already fully classified according to the legislation

EASME COSME

Statistics for Family Businesses

Qualitative

4. Malta Family Business Act 4.5 Main objectives of legislation

To encourage the regulation and governance of family businesses; To encourage the transfer of the family business from one generation to the next during their lifetime; To encourage and assist family businesses to enhance their internal organisation and structure with the aim of effectively operating the businesses towards succession.

To create a legal definition of family businesses.

4. Malta Family Business Act 4.6 Incentives

Governance Fiscal

• Loan guarantee – Enhanced capping on maximum guarantee

• Micro invest – Enhanced tax credit

• Positive consideration of lease renewal of industrial government leased premises

• Educational and Training –of family business owners and their employees

• Advisory – Funding for Legal, accountancy and notarial advice relating to business succession

• Mediation through Arbitration – for the establishment of the fair value of the family business

• Investment Aid 2014-2020 – Waivering of the condition that assets are to be bought by unrelated third parties – now applicable to family businesses allowing them greater access to investment aid

The Family Business Act

Reduced stamp duty on the value of the

immoveable property

Exemptions of stamp duty on a capped value of shares

Budget 2017

Parents transferring their family business to

their children during 2017 will benefit from a reduced stamp duty of 5% to 1.5%

4. Malta Family Business Act 4.7 Official launching

• Established in Malta whereby a business has a:

“Head office, agency, or branch or part of a business and includes any permanent presence of that business carried out in Malta”

• This allows foreign businesses to have access and applicability to the legislation and further enhances Malta’s identity as an International Finance Centre

4. Malta Family Business Act 4.8 Foreign family businesses

4. Malta Family Business Act 4.9 Why Malta?

Why Malta

?

No wealth tax

Low income

tax

6/7 tax rebate

70 + double

tax treaties

60 + bank

licenses

Cheapest & swift test

OECD

Onshore

Citizenship & visa

program

EU member

Schengen

Commission approved

Eurozone

Commonwealth

Common Law Jurisdiction

Euro Med North

African Relations

Pro business

Political Stability

Excellent climate

Multi Lingual

IFC

“You don’t own it. You’re just watching it, guarding it, nurturing it, to hand it over

to the next generation in as good a condition as possible.”

4. Malta Family Business Act Patek Phillipe

4. Malta Family Business Act

DR. NADINE lia Email: [email protected] [email protected] Tel: 00356 2220 9524 Web: www.familybusiness.org.mt

Thank you for your attention



http://www.familybusiness.org.mt/

http://www.familybusiness.org.mt/

5 Panel Debate

Edelfried Schneider (Accountancy Europe)

Jacques Hirtt (Muller & Associés)

6 Q & A

Thank you very much

For your attention

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Documents

Family Business Succession Workshop - Transeo European …...European Family Businesses – Jesus Casado 3. Marcel Grosbusch & Fils – René Grosbusch ... •Reform of Belgian law