Navigating the Transition from Family Business to Investor-Ready Company in Bosnia and Herzegovina

The USAID CATALYZE Engines of Growth (EoG) Activity and the USAID Diaspora Invest Project in Bosnia and Herzegovina are creating new investment opportunities in the country. While domestic family businesses have developed over generations, they need to prepare to find investors and for future investments. This was the driving force behind the organization of the “Family Business: Next Generation” workshop, which brought together representatives from 28 micro, small, and medium-sized enterprises (MSMEs) from Bosnia and Herzegovina.

The event aimed to shed light on the crucial aspects of transitioning ownership and management to the next generation within family businesses, a topic of importance in today’s business landscape. One of the central themes of the workshop was the transfer of ownership and management to the next generation. This process involves not only the legal and financial aspects of the business, but also the delicate balance of passing on the family legacy and values. Attendees gained insights into the critical factors that come into play during this transition and how to navigate them successfully.

Lazar Vujaklija from Western Balkans Private Equity Fund (WPBE) and Vladimir Pavlovic from WM Equity Partners (WMEP) led the workshop. They emphasized that successful generational handovers don’t happen overnight; they require careful planning. Participants learned about the triggers that signal the need for succession planning, such as the founder’s retirement, health issues, or strategic growth opportunities. The workshop emphasized that the sooner families start planning, the smoother the transition can be.

Vujaklija with WPBE said, “Events like this one help educate MSMEs on topics such as mergers and acquisitions, which are becoming increasingly important to their business operations. As owners look to exit their family businesses, find investors, or sources of financing, this topic is increasingly relevant.”

Partner Spotlight: WMEP

This was the seventh workshop organized by WMEP with the support of CATALYZE EoG in the Western Balkans region. Previously there were three workshops in Serbia, two in Bosnia and Herzegovina, one in North Macedonia, and one in Montenegro.

Approximately 150 companies participated in these workshops, part of the initial phase of the project. About 50 of these companies have continued working with WMEP throughout the following phases of support: individual support for preparing the companies for investment and matching with respective investors, as well as negotiations for signing private equity contracts.

So far, five companies have signed contracts with investors in a total value of USD 10 million, while additional companies are currently in the final phase of negotiating with potential investors.

“This event helps Western Balkans founders to change their perspective that selling the business is a legitimate business decision and it is not the sign that company is in some difficulties, as it was previously perceived. However, this process takes time, and it is important to leave enough time to go through all the steps gradually,” Pavlovic with WMEP said.

To facilitate this transition, the workshop provided valuable guidance, exploring real-world examples of businesses that have executed a generational transition effectively, offering tangible takeaways for attendees. This included discussing the sale of the company, the intricacies of company valuation, and the due diligence process, which plays an important role in any merger or acquisition.

During the conclusion of the workshop, the organizers said that the workshop addressed the challenge of managing family wealth. Beyond the business itself, family businesses often involve significant family assets and wealth. Attendees learned about strategies and best practices for preserving and growing family wealth, ensuring that it remains a valuable resource for generations to come. In Bosnia and Herzegovina, attracting potential diaspora investors is exceptionally important, where investors are ready to invest money. Partners only need to prepare the market more effectively.

About USAID CATALYZE Engines of Growth

The CATALYZE Engines of Growth (EoG) Activity (2020–2024) facilitates small and medium-sized enterprise (SME) resiliency, growth, and job creation in the Western Balkans by improving their access to and utilization of appropriate finance. With a focus on SMEs, particularly women-led SMEs (W-SMEs), EoG’s efforts are crucial for the economic recovery and sustainable growth of the Western Balkans region. To learn more, visit USAID CATALYZE Engines of Growth Activity.