After years in business, high number of owners selling Czech companies
The last few months have seen an increase in the number of owners in the Czech Republic selling successful companies, first established or privatised in the early 1990s. According to analysts, many privately-owned firms have reached a milestone, whereby owners now in their 50s or 60s are weighing whether to take them to the next level - or sell.
Founding a company in the Czech Republic in the 1990s was not an easy prospect following 40 years of communism"; some have called it nothing less than an adventure. Now, almost 18 years after the Velvet Revolution, some owners are reaping the rewards: more and more often choosing to sell. Czech businessman Miroslav Cizik says he understands why some are calling it a day.
"I think we can see many companies that have reached this point and it's either the owners reaching a certain age or simply growing tired and wanting to make use of money I think they fully deserve."
Businesses include everything from auto parts manufacturing to food production to biotechnology. Milan Musil is the project manager for the Prague branch of Arca Capital:
"In fifteen years in the business I have to say I've never seen anything like it. One of the main factors company owners are selling is that they are maybe a little worn out after many years of involvement. They've helped their companies earn a strong position on the market. But now they would need to take their firm to the next level, usually meaning expansion abroad."
Such moves of course require new strategies and above all far more available capital, one reason why some would rather sell than stay on for restructuring or bringing in new partners. But Gabriel Eichler, the head of the Prague-based equity specialist Benson Oak, admits it's not always easy for owners to make a final decision.
"You never really know when you are ahead or not ahead, I mean we have bought into companies where the founder and owner was just ready to move on after ten or fifteen years and got it to a certain stage. But when we took over we quadrupled sales simply because he wasn't there. So, that's an example of a situation: was he on top of it? There was obviously more room. You can be on top now, but you can never know how the industry will change: you could be doing well but go bankrupt in three years. You never know how things will change."
One of the most publicised sales in the Czech Republic in recent years, somewhat foreshadowing this year's "surge", was the sale of the nation-wide betting agency Fortuna. That was founded by well-known Czech lyricist Michal Horacek. After fifteen years in the business, he and colleagues sold their company for an undisclosed amount, estimated at 100 million US dollars. The lyricist - something of a legend in the Czech music business - told me the reason behind his choice:
"Under socialism before 1989, what we were lacking was not only the possibility to follow a business venture, to be involved in an entrepreneurial adventure, but also what we were lacking was the possibility to lead a decent life, to acquire a decent education and to travel and everything. I thought that this 'debt' should be repaid to my life-story. Getting stuck behind a computer in some office wouldn't give me back the world and the possibility to study and write and to live. That was personally why I decided to offer the company for sale."
As it stands, more and more company owners may soon find themselves in similar situations, if they haven't already. Some may follow Michal Horacek's example, others will probably still find the world of business too intriguing to give up.