A family business doesn’t have to end with the children. And that’s not a failure.

A family business doesn’t have to end with the children. And that’s not a failure.

According to available statistics, nearly one in four owners of Slovak family businesses fears that their children will not want to take over the business, and one in five already expects that their children will not get involved.

Passing a family business on to one’s children remains (for understandable reasons) the preferred path, and the Slovak consulting market is equally saturated with the topic of intergenerational succession. I get the feeling that selling a family business is still seen more as a defeat than as a sensible Plan B.

In my view, selling a business is just as legitimate and is often a “psychologically” and economically healthier decision for both the family and the business. It’s an opportunity to streamline the business, increase its value, and provide the owners and their children with free capital instead of more worries. And the business can have a new owner who, unlike the children, will have both the desire and the ability to continue actively developing it. A streamlined business also means having:

✅ Clear ownership structure (a holding company above the operating company);
✅ Separation of private assets and real estate from the risks of the operating company;
✅ Mitigated risks associated with hiring self-employed contractors (the “Švarc system”);
✅ Established transparent and justifiable cash flows to owners and other companies in the group;
✅ Key relationships, contracts, and know-how have been managed so that they do not depend on a single person; and
✅ Order has been established in accounting and contracts.

I thought a lot about this, including at the excellent International Congress of Family Businesses organized by the Family Business Institute, where Peter Varga discussed how to make payments from family businesses in a legal and tax-efficient manner. Thank you very much Erika Madari Matwij and Linda Vaculcikova for the invitation.

And we’ll also be discussing how to keep your business organized and operate sustainably in Slovakia at our November conference, “Why and How to Stay in Slovakia.” We’ve already sold more than 400 tickets, and there are only 24 hours left to purchase discounted Early Bird tickets— https://lnkd.in/ez8edcQ7