Almost one in three family businesses are planning to consolidate within five years and more than half have experienced growth over the past 18 months, a PricewaterhouseCoopers survey has found.
The data emerged from the Malta edition of PwC’s global survey of family businesses. The Qormi-based firm interviewed 100 family businesses by phone last month. Internationally, the global survey sought the views and outlook of nearly 2,000 family firms in more than 30 countries between June and September.
The number of businesses which expect to grow steadily until 2017 has increased to 65 per cent from 2010’s 50 per cent, with a further three per cent anticipating “rapid and aggressive” growth; 30 per cent are looking to consolidate.
In the last financial year, 53 per cent of Malta’s family businesses reported sales growth, compared to 65 per cent globally; 19 per cent experienced a decrease in sales while 28 per cent saw flat sales.
Major internal and external factors facing family firms proved to be similar to those managed by their international counterparts – and exactly the same as the ones they faced two years ago. Just under half said staff recruitment is a major challenge, followed by company re-organisation (21 per cent) and cash flow and cost control (17 per cent). Market conditions (59 per cent), competition (30 per cent) and government policy (28 per cent) are their major external concerns.
The key challenges facing family firms over the next five years remain similar to those which operate in other countries. Malta’s business families are watching the general economic situation (80 per cent), are aware of the need for innovation (70 per cent) and are facing up to price competition (62 per cent).
PwC Malta said some respondents were concerned top talent would continue to be hard to come by in the next five years.
“Human resources, finding the right technical people, experts in their field,” one family business replied.
“Employment – finding the right people and the right managers,” said another.
A quarter of the businesses interviewed operate in retail and wholesale; most of the others are involved in manufacturing, hotels and restaurants, transport, construction, automotive and finance and business activities. The businesses under study have a turnover of $5 million and over. Just under half have been established for 50 years, and just over 40 per cent are more than 20 years old. Four in 10 are run by the family’s second generation; 14 per cent by the first, 22 per cent by the third, and 23 per cent by the fourth or later.
Respondents mostly included chief executives, financial directors and board members, the majority of whom own and manage the business. More than three-quarters are family members. The youngest respondents (14 per cent) were under 35; only eight per cent were 65 and older. The majority of respondents were aged 45 to 64.
“The survey found that most family businesses in Malta are aiming for growth,” according to PwC Malta territory senior partner Kevin Valencia. “However, as was the case in our last survey two years ago, the ratio of firms trying to consolidate is still higher than the global average.”