It’s a family affair: FBN opens Romanian Chapter

With an estimated 65 percent of companies in Romania being family ventures, the Family Business Network has launched the Romanian Chapter which should give this community greater cohesion.

By Otilia Haraga

Family businesses in Europe posted a total turnover of EUR 1.8 trillion in 2011, representing 18 percent of the GDP of the European Union, and providing more than 5 million jobs.

A survey carried out by the European Commission in 2008 found that family concerns represented between 31 percent of all businesses in countries such as Great Britain and the Netherlands, and 61 percent in Sweden.

Significantly enough, most family businesses are still in the hands of the first generation but it is expected that one out of nine businesses will be transferred over the next five years.

Read more about

East European Coffee Culture Festival: brewing excitement this weekend

read more

In Romania, unofficial statistics suggest that 65 percent of companies are family businesses but they are mostly at the second generation stage, since they were started after the 1990s. Most of these are small enterprises but there are also companies that have grown at national or international level.

“At European level, family businesses are lost on average at the third generation,” says Mihaela Harsan, secretary general of the Family Business Network (FBN). “For instance, we have a situation in Argentina in which a father, aged over 90, is adamant he will leave the company in the hands of his sons, who themselves are above 70 years old. You come across some interesting and amusing situations.”

FBN International was founded in 1990s and was registered in its current form in 2005, gathering over 5,600 families from 56 countries under its umbrella. The Bulgarian FBN chapter was founded in 2007.

The founders of the FBN Romanian Chapter are companies Omnilogic, MB Telecom, Global Vision and Temad Co. The management board is made up of Gabriel Marin of Omnilogic (president), Mircea Tudor of MB Telecom (member), Sorin Preda (member) and Mihaela Harsan (secretary general).

Businesses that aspire to become part of the FBN must comply with certain criteria. First, the business should have been in the family for at least 10 years and the family must own the major package. Also, at least one relative should be in the top management.

“A professional manager will look strictly at figures, and make cold decisions depending on the targets and budget, without being interested in the welfare of employees. With a family business, the employees’ welfare is much more important. These things existed in Romania during the inter-bellum period too,” says Harsan.

In terms of revenues, the company should be a good taxpayer. The turnover, number of employees, public perception and involvement in the community are also taken into consideration.

Membership of the FBN requires an admission fee of EUR 1,000 and an annual membership fee of EUR 1,000.

Currently, there are ongoing assessments of eight potential members: Romanian companies from the areas of protection equipment, pharma, healthcare, textile industry and luxury.

“We look at the jobs the company offers. If there is a firm that does not have employees but has a huge turnover, we are not necessarily interested in that. We are interested in their social projects and how much they give back to the communities they come from,” explains Harsan.

In most countries, including Romania, the legal framework regarding inheritance is favorable to family businesses, while in others it is prohibitive and inheritance taxes can even reach 90 percent, like in Finland.

“It is something ancestral, especially in our Latin space, that when you do something, you want to leave an inheritance for your children. This is in fact the first choice,” says Marin.

otilia.haraga@business-review.ro