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A voice for the family business sector in Italy

Family businesses are at the heart of the Italian economy, and one of the sector's leading lights, Dr Alberto Falck, will have a prominent role at this year's Family Business Network conference in Rome.

Families in Business caught up with Dr Falck, chairman of the Italian family business organisation AIdAF and head of the Falck Spa company, as he prepared for the big event in Rome. AIdAF includes 130 member companies and 90 individuals, themselves drawn from many leading Italian businesses. The organisation is also part of the European-wide lobby group GEEF, the umbrella body for eight such bodies.

The Italian body was formed in 1997 by a group of approximately 25 associates drawn from the family business sector. They had worked together as a private organisation for 15 years, but felt the time had come to both make their experience better-known to the larger community and give voice to the specific needs of the family business sector in Italy.

Today, the organisation is growing quickly, and has expanded its activities to lobbying, education and training, as well as raising awareness of several key issues for the sector, such as taxation and legal issues at both Italian and European levels.

"We organise frequent workshops and meetings with family business 'gurus'and various experts from academic institutions, law firms, investment banks and business figures of national and international standing, "explained Dr Falck.

"Special attention is devoted to young members, by offering them ad hocmeetings and retreats. This year, the main topic was communication in all its different facets, as we consider it most critical for the development of future owners and leaders.

"There are many benefits to be gained from these activities. They contribute to strengthening one's culture and to the awareness of the strengths that family firms have, as well as their problems and the possible solutions. They enforce one's sense of identity and pride in being part of a family business, and they offer the opportunity to have one's opinions and experiences shared and confronted by a distinguished peer group. "

AIdAF has made important inroads on the political front too. In Italy, the group made a 'significant contribution' to the reform of estate law (passed recently by the Italian Parliament), as well as a current business law reform project which is aiming to cancel Italy's current prohibition of succession agreements covering the handover of control of a family business from one generation to the next.

Dr Falck and his colleagues in AldAF have been very active in supporting GEEF as it works hard to secure official European Commission acknowledgement of the specific nature of family business, and their importance to the economy.

"The European Community focus has, so far, focused on the small and mediumsized enterprise (SME) sector, "added Dr Falck. "We will then seek a recommendation to draw the attention of member countries'governments to family business' needs, as the existing recommendation is targeted at SMEs only. "

He supports the European lobby's wider ambitions, explaining, "The next step could be to achieve one or more directives for family business that incorporate the best of each country's legislation. "

Dr Falck reflects on the underlying need to achieve recognition for the sector and to make life easier for family businesses. The companies within the Italian organisation represent 8% of Italy's national gross domestic product (GDP) and many of them are small or medium sized, with parallels to the traditional SME sector, rather than large corporations.

"The guiding principle of all lobbying is the need to protect family businesses from possible troubles and to eliminate legal and fiscal constraints that represent a major obstacle to their continuity and development, "adds Dr Falck.

"Given the fact that family business are the backbone of developed economies, this would not simply benefit owning families, but it would also impact a significant part of our economic and social system. "

So who are these companies and how are they composed?

"Most of them, about two thirds, of the members"states Dr Falck, "are medium-size family companies, but we also have some small and some very large companies, ranging from€15 million to €5 billion in terms of turnover.

"They are located all over the country, with prevalence in the central and northwest regions. They are mostly at the second and third generation stage in terms of ownership and, consistently with the Italian model of family-firm relations, the owning families generally play a very active role in the business. "

AIdAF is the Italian chapter of the Family Business Network, the world association of family business that was created over ten years ago under the patronage of IMD in Lausanne, and all its associates are FBN members.

Dr Falck is extremely enthusiastic on the subject of this year's FBN conference and the fact that it is being held in Italy, a country whose name is synonymous with family enterprise culture.

"I consider the FBN Conference to be the most relevant event in the world, as it enables family business members from over 40 countries to meet together to share and confront their experiences.

"AIdAF is organising the Conference with Bocconi University School of Management and in cooperation with FBN. Bocconi is a partner of AIdAF for training and research.

"The Conference theme, 'the role of family in family business', was chosen in order to award recognition to the special role of the family institution, its hundreds of years of tradition and the particularly high density of family firms we have in Italy, "pointed out Dr Falck.

"We are going to explore this in all its multiple facets. We will be presenting and discussing, for instance, the roles of different generations, the roles of family in different countries, the roles of families who have different approaches and relationships with their business, and the conditions under which the family is a strength or a weakness. "

Traditionally, the FBN Conference agenda is divided into a research forum and a main conference. However, for only the second time in the history of FBN Conferences, the agenda will include a mini-conference exclusively for 'next generation' family members. This takes place during the overall event on 4 October.

"The main conference will continue to include plenary sessions and parallel sessions of workshops, "said Dr Falck. "These are very useful for holding deep discussions, so that presenters and delegates can learn from one another in relatively small groups.

"Given the conference theme, families will be the main actors of both the plenaries and the workshops, featuring live testimonials from around the world. "

He is optimistic that the FBN event will enrich the knowledge and understanding of its participants. "My expectation is that delegates will leave the conference having learned something more about their role, and how it might change in the future to ensure continuity and development of the business. "

But what of the future? Italian family businesses are thriving, but like everywhere else in Europe and the USA there has been a trend towards greater corporatism, even though the sector has a long verifiable record as an important source of employment and economic stability.

Many experts believe that the lobbying activities of family business' associations like AIdAF and GEEF are vitally important to the sector, especially where they are achieving legislative and taxation changes at European and memberstate level. Recognition of the sector is important too, and the chairman of AIdAF is under no illusions about the nature of these issues.

Questioned on the main challenges for family firms, Dr Falck is in no doubt. "In essence succession, which must be well prepared, "he responds.

"This especially refers to grooming effective future leaders of business, and gradually empowering them. The size of the business is also a challenge, as it is no longer a good time for protected niches, so we must be ready to compete in a global environment. This, I think, makes our challenge even more exciting.

But he adds: "Bureaucratic constraints are also a main challenge, as they form an obstacle to growth, especially for SMEs in this sector. "That is why FBN member organisations are becoming increasingly active in campaigning for sensible, simple reforms to taxation and succession regulations.

Finally, he believes another challenge is the management of family ownership dynamics although, nowadays, families and businesses can actually take advantage of increasingly advanced professional support. 

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