Malta: Hidden Growth Within Family Businesses: Driving Success Without The Fame

Last Updated: 29 November 2016
Article by Anthony Pace


For over a decade scholars, politicians, economists and journalists have expressed growing interest in family-owned companies, evaluating their economic impact and dissecting their unique business models.

Much ground has been covered. Graphs and reports compare the performances of family and non-family companies of diverse sizes, sectors and regions, during economic ups and downs. Leading universities and business schools integrate family business courses into their curricula. European and international institutions are paying close attention to the sector. Finally, family businesses themselves have come out of shadows, unabashedly publicizing and highlighting their family roots.

Still, there is no generally agreed definition of the term, and only limited data is available on the sector's real economic weight. Many family business owners stay discreet about their success, rarely appear on front pages, and continue to be an enigma.

For many, the term family business immediately brings to mind the quintessential mom-and-pop. However family businesses are all around us – from small and mid-sized companies to renowned multinational corporations. One third of all companies in the S&P 500 Index are defined as family businesses.1 Some 30% of all companies worldwide with over US$1 billion in sales are family-controlled enterprises.2 Of the 250 largest companies in France and Germany, 40% are family-owned.1 Many family companies do extremely well, and even better than their non-family counterparts.

Our research, conducted by KPMG and European Family Businesses (EFB), involved discussions with prominent family business leaders in various European countries.

We sought to shed light on some frequently asked questions regarding family businesses:

  • What does success mean for them, and what is their ultimate strategy: stability; growth, or profitability?
  • What drives their success, and what are the inherent barriers to growth?
  • When growth is at stake, how do owners choose the right strategy and align the interests and needs of both family and business?

We trust that our report will provide you with insightful, interesting answers.


Longevity, long-term outlook, and stability are traditionally cited among the specific attributes of family businesses. Although stability is sometimes mistakenly confused with stagnation, closer examination reveals that the two have nothing in common. To the contrary, growth is high on the agenda for family businesses, and long-term orientation tends to steer strategy.

Family legacy and strong personal attachment underpin the desire of family business owners to preserve their businesses for their heirs. Long-term outlook is their vision, longevity is their mission, and growth is their clear strategic choice. While growth is high on the agenda for family businesses, the way in which they achieve it has a number of characteristics unique to them.

Family businesses tend to project into a very distant future. In the words of one of our questionnaire respondents, "we have a 50-year strategy", "after 160 years of existence, our objective is to see the company last for another 160 years", "the desire of our company is to exist in 500 years' time". Their long-term outlook is measured in decades or generations, not quarters or months. Family-owned businesses need not fret about impressing investors with short-term performance figures. They can afford to slacken the pace slightly without sparking anxiety over momentarily lower or flat figures. Yield tomorrow is more important than return today. Family businesses are able to think and plan in the long run.

They can take a longer-term strategic outlook, which is not always possible in other business models. This means they can make decisions that are right for the long-term even if that means sacrificing some short-term earnings.

The first key to sustainable success for family businesses is therefore safer thinking and moderate risk tolerance. However, these are balanced with an understanding that 'adequate' growth is necessary for the company to stay successful and competitive. As one Dutch respondent notes, "if you are too focused on stability and security, it could hinder growth".

The second key is prioritization. Our recent European Family Business Barometer3 demonstrates that, while 83% of family businesses plan to grow in the year to come, 57% cite improved profitability and 34% increased turnover as their top business goals. Both profitability and turnover growth are necessary for a company to survive and remain attractive to investors and analysts. Nevertheless, profitability is critical to a company's long-term survival.

Finally long-term vision, which could appear to be a barrier to growth, most likely spurs on family businesses. "Dreaming in the long term and seeking resources in the short term" is the way one Spanish respondent defines his business tactics. Long-term outlook is in the DNA of family businesses, the philosophy determining everything they do. It tends to steer strategy, enabling the development of good business planning, breaking down plans into small projects and taking one step at a time. Long-term outlook creates positive thinking, since businesses can grow in the long run without being beaten down by occasional downturns in performance. Family business owners can accurately choose the right strategy and prepare their companies for growth.

Preparing to grow

The determining feature of family businesses is their particular business model in which family and business interests are closely aligned and strongly intertwined. While owners seek business prosperity and family harmony, they are sometimes confronted with issues like differing positions of the shareholders, conflicts about business direction, and in the worst-case scenario, sibling rivalry, leading to shareholder exits or the (partial) sale of the company.

When growth is put on the agenda, business owners wonder how to make it happen, how to align business and family interests, and how to prevent those conflicts or differences of opinion that hinder growth.

As a first step, our respondents advise to clearly differentiate between family and business and not to mingle the two spheres. The business should be considered a business project, not a purely financial asset. The company's primary goal should be to serve customers, not the family. "By serving its customers, it will eventually serve the family". A business, with its vision and strategy targeting its well-being, should be separate from the family with its shareholders. The co‑functioning of both is ensured by good governance. Governance mechanisms implemented should serve several purposes, such as separating ownership from management, setting up family and business rules, and defining dividend policy. With clear rules and guidelines as an anchor, family businesses can pursue their growth plans.

This separation does not mean that the business goes its own way. Ownership has special meaning in family companies, with a strong personal element. The family business should not be seen purely as a liquid asset, but as a property which is built and developed by the family over generations. "Family and business are two different things, they are separate. Business is primary to the family. If business interests are put in first place, it will then ensure the family runs smoothly, not the other way around", comments one French respondent. His Spanish and Dutch counterparts concur: "Conflicts occur when no distinction is made between the company and the family." "We have made an almost exorbitantly strict separation between family and business. From the beginning, the first focus was the business."

Once rules are set up, the next step is to communicate. Shareholders should engage in constant discussion and "open dialogue" with the business to ensure they are happy with how the business is being run and what the returns are. Owners should have an "adequate knowledge of the company" and feel involved in its development. Our respondents confirmed that "communication is key" to satisfy all parties.

Good governance not only separates the functioning of family and business, but also helps both achieve their shared goal: to safeguard and increase family wealth. Parallel planning4 helps accomplish this goal. It is a proven tool to align the thinking and planning of both family and business into a comprehensive family business plan.

Parallel planning facilitates communication about business strategy and potential, which are in turn supported by the family's investments in human and financial resources.

To read this article in full, please click here.


1. The five attributes of enduring family businesses, McKinsey & Company, 2010

2. What you can learn from family business, HBR, 2012

3. European Family Business Barometer — Successful & Resilient (fifth edition), EFB and KPMG, September 2016

4. The term 'parallel planning' was introduced in: Strategic Planning for The Family Business. Parallel Planning to Unify the Family and Business, Randel Carlock and John Ward, 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions