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67 %
of family business leaders cite creating a legacy as an important personal long-term goal
59 %
say all family members involved in or affected by the business have similar views about the company’s direction
65 %
say they’re looking to ensure the business stays in the family
Changes in the structure of Croatian private and family businesses are underway, as some founders and owners plan to transfer their businesses and assets, either by passing the reins to successors in their families or selling the business to the highest bidder. This transfer - if started early enough and with the right support to navigate the complex issues involved - represents a once-in-a-lifetime opportunity for founders and owners to create the right outcomes for themselves, their families and the businesses they’ve worked so hard to build.
Successfully navigating a sale or transfer to the next generation is critical given the impacts these decisions will have. Two-thirds (67%) of respondents in our 2023 Family Business Survey told us that creating a legacy was an important long-term goal. Our NextGen Survey 2024 – SEE Report highlights that with up to half of private sector employees being employed by family-owned and run companies, ensuring that the sale or transfer to the next generation is carried out thoughtfully and effectively is vital for the overall economic landscape.
Sale or succession: Which path will you take?
Choosing whether to sell the business or transition it to the next generation is a complex decision that involves careful planning and consideration of a range of issues, from market conditions to tax, legal and operational impacts. But whichever path an owner or founder takes, a paramount consideration needs to be ensuring proper governance and communication within the family before deciding to sell or pass over the reins to a successor. This builds cohesion around the family’s goals, establishes processes and procedures for making decisions, sets out clear roles and responsibilities and, ultimately, helps reduce the likelihood of family conflict.
The majority of Southeastern European (SEE) family businesses are still run by the first generation of entrepreneurs who formed them in the early 1990s. According to our 2023 CEE Family Business Survey, 64% of CEE family businesses (double the 32% global figure) are in the hands of the first generation. However, with many of the first wave now in their 60s or 70s, this decade is seeing the approach of a changing of the guard in leadership in family businesses.
Our global insights reveal a compelling trend: with each generation, fewer heirs show interest in actively participating in the family business. While 60% of successors remain engaged in the second generation, this drops to 32% in the third and just 16% in the fourth. Passing the torch is no easy task - founders often view their businesses as one of their children, making it challenging to hand over the reins, even to their direct heirs.
According to our NextGen Survey 2024 – SEE Report, NextGen in SEE generally feel more positive than the global average about family trust levels. However, only 27% believe there are high levels of trust between family members and non-family members within the business.
NextGen is concerned about succession planning. Just over half (51%) of NextGen in SEE are aware of a succession plan in their family business.
By considering complex family dynamics up front, it then becomes easier to navigate the key elements of preparing to sell or transfer the business, which we explore in more detail below.
By your side for the moments that matter
While the issues are complex, the good news is Croatia’s enterprising families are more aware than ever of the need to carefully plan for the future of their business, whether they’re looking to sell to the highest bidder or pass the reins to the next generation. Every family business is unique, which makes it important for both the current and next generations to have the right guidance from a neutral third party to give them the full picture of the issues to address and their options for creating value.
At PwC Croatia, we are focused on the needs of Croatia’s enterprising families as we have a long history of working closely with family businesses. We understand that the business is often like another family member and we know that no two families are alike.
Leveraging our deep insights into the complex dynamics surrounding family, ownership and the business with our technology-enabled solutions, we are well-equipped to support founders and their families in navigating critical processes such as succession, sale, and the transfer of business management. And with our expertise in tax, governance, mergers and acquisitions, legal matters and succession planning and our experience with engaging, supporting and advising the next generation, we can help them create the right outcomes from selling or handing over the reins of the family business.
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