In view of the recent economic upheaval and the resulting economic implication, FBS2M Family Business Consulting, a new Maltese-Scottish partnership aimed at improving the contribution and sustenance of family enterprises, was pleased to note the attendance of many participants from family businesses at a conference dealing with the important issues of succession and governance within family businesses.

In an introductory comment, Mario Duca, managing director of 2M Management Consultancy, noted that the main objectives of the conference were to enable family enterprises to understand and view different approaches for tackling succession and governance actions, and the dangers of not tackling such issues. Presentations by Mr Duca and

overseas speakers Ken McCracken and George Stevenson shared experiences of other family businesses that went through these processes.

The conference was also the first joint activity between 2M Management Consultancy and Family Business Solutions Ltd, trading under the name FBS2M Family Business Consulting. It also served as a stepping-stone for the launch of specific courses aimed at tackling issues related to family businesses. George Stevenson, chairman of the Scottish Family Business Association, stressed: “Traditional business training does not touch on the skills that family businesses need.” It was also noted that the current MBAs available on the market have hardly any or no modules at all that directly relate to family business issues.

The conference was also intended to promote the initiation of a Maltese Family Business Association that will soon be officially launched with the aim of providing local family businesses with a reference point and a forum for discussions and training in all sectors relating to family business and enterprises. Mr Duca said that some of the larger family enterprises have already expressed interest in the project. The objectives of this association will also involve contributions and collaboration on a national level, as it will be developed with the aim of creating a network of communication for all family businesses, irrelevant of size and nature.

In a panel discussion, it was noted that a considerable number of family businesses fail to make it through to the second and third generations, indicating the risk that family businesses face if governance and succession are not planned and properly executed. Family businesses that do not organise themselves properly can result in the breakdown of the family business with its implication on employment and the cost to the economy. Efforts to improve succession and governance practices can effectively set the path towards minimising the stumbling blocks that generation after generation have to face when assuming responsibility for the family firm.

In his presentation on governance in family businesses, Ken McCracken, Partner in FBS Ltd, noted that family businesses must go through the tougher process of deciding whether to separate the family issues from the business issues and how this should be implemented to minimise conflict as much as possible.

He went through the methodology used by FBS2M, the FBS2M Consulting Framework, a process that it developed and refined over the years and that will be available to the local community FBS2M. The model looks into the structure and core values of the family in question and builds its consulting process around these concepts. He also noted that very often families tend not to adapt and change their structures according to the new realities in the market, preferring instead to cling to the traditional set-ups. This could work for the second generation but will cause failure in third and other generations, as the requirements and conditions of these generations are totally different from those found in the first generation. The key to success is to be organised.

In his session, George Stevenson supported this by relating a personal experience from his own family enterprise where, due to family bonds and business decisions not being taken, the family business went through severe financial difficulties. Unfortunately, many agree that such circumstances are common in family firms.

In his closing speech, Mr Duca noted that, traditionally, family businesses consulted legal and financial advisers. It is not the aim of FBS2M to eliminate these resources from the picture but instead to map out the blueprint for the family business to move forward in collaboration with such institutions in order to provide a holistic rather than partial approach. Today’s world has become too technical for one firm to provide all the services required by a family business, hence a collaboration between the different advisers will provide the family business with a better chance of consolidating and of being successful through the generations. He said it was pleasing to note that such collaboration is already being developed between FBS2M and a number of leading firms.