Companies whose owners are currently over 55 years old account for 16 percent of the workforce and generate 19 percent of total revenues of all companies. Therefore, the transfer of business from the first generation of entrepreneurs that emerged in the 1990s is not just a problem for individual companies and families, but also a significant challenge for the Croatian economy.
For all those who do not want their company to retire along with them, the question of timely and successful business transfer is of crucial importance. Business transfer is not only a challenge faced by entrepreneurs and their families but also a significant macroeconomic issue, which you can read more about in the latest issue of Lider. EU documents discussing the importance of the business transfer issue for small and medium-sized enterprises point to 450,000 companies with around two million employees that undergo the business transfer process each year in the EU, estimating that around 150,000 companies do not adequately address this issue, putting approximately 600,000 jobs at risk.
This topic is particularly important in Croatia, where the majority of companies, given the youth of the state, are still in the hands and under the management of founders who lack experience with business transfer. The Business Transfer Barometer, the first research on this topic in our country, conducted by the Center for Small Business Development Policy and Entrepreneurship (CEPOR), indicates a fairly significant problem – in Croatia, there are 16,590 companies with around 179,000 employees whose owners should start planning the business transfer process, and more than 5,300 companies represent a risk group, putting around 57,000 jobs at risk.
Here are some additional data:
• The share of companies whose owners belong to the 55+ generation in the total number of companies in Croatia is 31% (the highest share is in Istria and Karlovac counties)
• These companies account for 16.1 percent of the total number of employees in legal entities (the highest share is in Međimurje and Zagreb counties) and 18.9 percent of the total revenue generated by business entities in Croatia (the highest share is in Lika-Senj and Split-Dalmatia counties)
• In Croatia, there are 16,590 companies whose owners should start planning the business transfer with around 179,000 employees in them, and more than 5,300 companies with around 57,000 employees are a risk group whose owners underestimate the complexity and duration of this process
• Among companies whose owners are 55 years and older, the share of family businesses, according to the European Union’s definition, is 38 percent, which is significantly lower than the 65 percent share that family businesses have in Western European countries
• The majority of companies in the hands of the 55+ generation were established in the 1990s (76 percent), and their owners are also the founders of the companies in as much as 92 percent of cases, without personal experience in participating in business transfer
• A significant share of owners considering the future of the company plans to transfer it to family members (children), but only a small share is considering other options: selling the company, transferring management roles to employees or external managers
• A significant number of entrepreneurs expect support in the business transfer, primarily regarding the technical implementation of the business transfer (43 percent), valuation of the company (42 percent), and aligning the interests of the company and family when deciding on the future of the company
• After withdrawing from the management role in the company, 68 percent of owners still plan to be present in the company, and as many as 70 percent expect additional sources of income alongside retirement.
