What challenge do Polish family businesses face today?
They are at a unique and crucial moment of generational change. This is especially true of businesses established in the early 1990s. There is a growing number of entrepreneurs of retirement age who will no longer be professionally active in the next 10 years. The transfer of reins will take place in the vast majority of companies for the first time.
How important is this part of the Polish economy?
Family businesses are the main employer in Poland. 52% of them work there. employed. Their strength is also evidenced by the large increase in revenues over the last 15 years. Our report “From founder to successor” shows that in private companies conducting financial reporting between 2007 and 2023, average revenue increased 2.5 times from PLN 30 to 80 million.
You mentioned that in many of them, succession will take place for the first time. Do they therefore expect support in this process?
The conversations we have with clients show that discussions and negotiations between the founder and the successor have become more intense in many companies recently. Mainly due to the growing popularity of family foundations, but also health problems of family members or cases of sudden succession that occurred among friendly entrepreneurs. Therefore, the hunger for knowledge and the search for partners to talk about succession and work on the inheritance of private and company assets have increased. This makes it important for family businesses to have entities from which they can obtain information and specialist knowledge needed to continue running the business.
So what challenges do entrepreneurs face?
The needs of wealthy entrepreneurs in the area of inheritance are very diverse. Decisions regarding the division of private or corporate assets and competences in the company among children, establishing a time frame for handing over the helm to successors or even creating an individual educational path for the successor are just some of the challenges clients face today. In the succession process, an objective approach to this process by a person who is completely uninvolved in the life of the family and the company may prove helpful.
Can a bank and financial institutions be an important advisor in the succession process?
They play an important and sometimes even key role in the growth and development of companies. Therefore – definitely yes. The bank’s role is to show a broader perspective so that the client can compare his thoughts with people with experience in the succession processes of other companies facing similar challenges.
How does Bank Pekao SA support entrepreneurs in this process?
In 2023, we established a Family Office, which is aimed at helping Polish businesses in the area of inheritance and succession. Thanks to experienced experts, we offer an independent and neutral approach to the entire process. Our specialists take care of clients at each stage, depending on their needs and situations. The Senior Family Officer individually assesses the client’s situation and, thanks to extensive knowledge in many areas and appropriate psychological preparation, adapts solutions to the client’s business needs. Pekao approaches this comprehensively, hence, for example, when it is necessary to obtain specialized legal or tax advice, it allows clients to contact proven external partners. In November this year, the Family Office offer was expanded to include access to further prestigious services, such as individualized medical care and access to luxury travel. We know that there is no one recipe or one universal solution that will cure all problems. That is why we focus on an individual approach and presenting all the possibilities available on the market.
Who comes to the bank for help in carrying out an intergenerational transfer?
Since the entry into force of the Act on Family Foundations, clients have been constantly asking us questions related to succession and inheritance of property. However, we have noticed that the percentage of successors who want to talk to us about what is important to them before they take over the responsibility for running the family business has increased. The applicants include not only seniors who have questions about where to start, what to focus on and what classic mistakes to avoid in order to carry out the succession well. We are also observing greater interest from potential successors of family businesses, who want to know what they are up against and need guidance to prepare well for it. This makes us optimistic, because according to our report, one of the biggest problems usually associated with succession is the lack of willingness of potential successors to take over the responsibility for running the company.
From the perspective of a year and a half of the Family Office’s operation, how do you assess its impact on Polish family businesses?
We found out howwe play an important role in this often difficult and long-lasting process. We often hear from company owners, but also successors, company managers and even employees themselves, that they feel safer if matters related to succession are planned and implemented step by step. It must be remembered that an effectively handled succession is not only one in which a successor enters the company in place of the senior and takes over. There are many cases in which families need support when they already know that the succession they planned will not take place or will take place in a different form than planned. This is also a big challenge faced by some owners today and they also need support and to be shown the direction in which they should follow in order to maintain the continuity of the company’s operations.
Therefore, in our activities, we strongly focus on the process of education and awareness of the risks related to the succession process. We want the scenario finally chosen by the family to be supported by an analysis of all solutions available on the market. Depending on, among others, depending on the type of business, the age of the company’s founders, as well as the education and plans of the children, or the structure of the business itself and its assets, the solution will be different for everyone. Conversations with the senior or successors do not usually end with the first meeting. We will come back to what we talked about after some time, we listen to the needs of all process stakeholders, providing space for senior-successor conversations. It is important to raise awareness of what is important at which stage of the process and what elements cannot be omitted or even concealed during its planning. Success is within reach, but – as in business – you need to understand the process and plan your actions accordingly. We are here to help.
