What do the descendants of John D. Rockefeller, the oil tycoon, the family of Bill Gates, the founder of Microsoft, or the dynasty of Li Ka-shing, the Hong Kong telecommunications magnate, have in common? They all rely on streamlined governance, structured management and protection of family property through family office solutions. There are over 10,000 of them all over the world. And half of them have been established in the past twenty years. However, family offices are no longer a privilege of merely the world's billionaires, and the benefits of this type of asset management have also been widely used by successful entrepreneurs in the Czech Republic and Slovakia in recent years.
The Velvet Revolution reopened the door to free enterprise, and the turbulent 1990s saw the establishment of a range of successful family businesses, which count among the cornerstones of the Czech economy. At the turn of the millennium, the business environment began to rapidly professionalise and marked the beginning of another wave of successful entrepreneurs, whose companies have often grown from scratch to become among the elite hundred of the most successful companies according to the Czech TOP 100 ranking.
Topics such as property management and protection or the intergenerational transfer of companies was widely discussed in the West already after 2000; in the Czech Republic, however, specialised services for private clients at that time were provided by only a small group of experts.
The idea from Venice
This group also comprised lawyers from our law firm. At that time, elite M&A specialists standardly concluded one transaction per week and were eager to offer clients additional added value. “Our idea was to provide them with additional smart and innovative legal and tax services in the management of assets that they acquired through business or as a result of the sale of the company. Therefore, in 2007, I was the only lawyer from the Central and Eastern Europe region to attend an international conference in Venice focused on family businesses and their operation and development,” managing partner Jaroslav Havel reminisced.
“The event attracted extraordinary attention in the Western world. There, I gained experience from lawyers from specialised law firms, private banks and asset managers, private equity funds and established family offices, which had long been involved in the management of private clients' assets. I was convinced that we should provide such services in our region too,” he added. For the two years that followed, led by the example of successful Western models, our office was the first one on the Czech market to build a team of lawyers specifically dedicated to services for private clients. “Subsequently, we visited several leading German and Swiss law firms specialised in this field, and gained knowledge right from the very best,” Jaroslav Havel remembered.
When the economic recession that broke out in 2008 made Czech entrepreneurs become more interested in the management and protection of their assets, HAVEL & PARTNERS, as the only office, offered them a comprehensive and specialised service in this area. The service has been provided by leading experts who have gained experience from renowned Swiss, UK or US bankers and foreign law firms, as well as from learning from successful foreign models of asset management for the world's richest families, including the Rockefellers, the JP Morgan family and the Porsches. They then successfully used the knowledge from abroad for the benefit of their domestic clients.
Since the end of the crisis, when the economy bounced back and was growing again, the number of CZK billionaires in the Czech Republic and Slovakia has been constantly growing. Today, according to our estimates, their numbers total about 700 to 800. This is also connected to the growth of the size and value of their companies and to the increase in the value of investors' assets and investments especially in real estate, shares, cryptocurrencies, and other investments of larger financial groups.
Today, HAVEL & PARTNERS is taking care of more than 250 prominent entrepreneurs and their families. The permanent clientele of the office comprises important Czech and Slovak entrepreneurs, managers, and business owners, including a third of the richest Czechs and Slovaks. These clients in the Czech Republic and Slovakia are taken care of by a stable team with unique know-how – the largest advisory group in Central Europe thanks to its 25 mostly senior lawyers and another 12 tax experts.
Outlook and experience
"Our clients deal not only with a wide range of business topics but also with purely private matters. Most often we help them plan the administration and long-term protection of their personal and business property, we advise them on private foreign investments, tax planning or family law. Business owners, who are at the peak of their productive age today, usually also address the issue of succession," explained David Neveselý, a partner, who takes part in the management of the advisory group.
In addition to the reputation, stability, speed and innovation of the law firm, clients also appreciate the fully-fledged engagement of the office's partners in solving private matters, their significant business insight, as well as the experience they are ready to pass on to their clients. "Afterall, who else do you want to get advice from than those who have built a large, reputable and at all times profitable company on the market that is similar to yours, and have to conservatively manage income, invest and provide them with adequate protection against the negative effects of unexpected events, family storms or crises," added Jaroslav Havel.
HAVEL & PARTNERS has brought to life hundreds of family holdings and holding structures, and dozens of trusts and endowment funds in the Czech Republic and Slovakia.
New era – new possibilities
In 2014, a new Civil Code came into effect in the Czech Republic, which brought opportunities in the field of asset management and asset protection, which until then had been common exclusively in the Western world. In the Czech Republic, for example, new and progressive succession law institutes have appeared, and also trusts, which have quickly become increasingly popular not only thanks to their subsequent convenient integration into the tax system. For the past seven years since the new Civil Code came into force, more than 2,000 trusts have been constituted.
Being knowledgeable and well-oriented in the new laws co-drafted by its experts, the HAVEL & PARTNERS team quickly became a leader in trust establishment and management. Thanks to the law firm’s experience, the fears that publicly available records will discourage persons interested in this method of asset management have not proved true either. On the contrary, the partial transparency of the records has increased both the trust of the settlors themselves and e.g. the banking sector, and has also significantly facilitated communication with the courts and administrative authorities.
In 2019, the law firm aptly complemented services to private clients with another alternative to trusts – family foundations. These, combined with a traditional and conservative arrangement based on a private holding, form another smart way of satisfying client demand. And not only in the Czech Republic, but also in Slovakia, where HAVEL & PARTNERS, thanks to successful cooperation with top private banks, managed to penetrate the slightly more complex environment of Slovak millionaires. Many clients in Slovakia thus use the possibilities of Czech legislation and perceive the Czech solution as a guaranteed protection of assets.
During the 13 years since the establishment of the specialised team for private clients, HAVEL & PARTNERS has helped to bring to life several hundred family holdings and holding structures in the Czech Republic and Slovakia, as well as dozens of trusts and endowment funds, and its mission is definitely not over yet. The current crisis will re-examine how companies are ready for the economic downturn and how private assets acquired from business revenues are protected. In other words, this is the best time to re-visit the benefits of local family office structures.
Key contact persons for private clients:
Jaroslav provides comprehensive advice to private clients. Jaroslav is sought after by the most prestigious Czech and Slovak entrepreneurs and managers for his many years of unique experience, reputation and contacts in both law and business. He specialises in advising on the development and management of family businesses and other major Czech and Slovak privately-owned companies, as well as on asset protection and succession issues.
His long-term focus has been on services for private clients and specialised advice in connection with the management, possession and comprehensive protection of family property in the Czech Republic and Slovakia. David is an expert in the formation and management of family office structures and specialises in the use of private holding companies, family foundations and trusts, inheritance law and legal and tax issues related to the philanthropic and charitable activities of private clients.
Vladek specialises in advising Czech and Slovak private clients, structuring private wealth protection, building comprehensive family office solutions, private holding companies, family foundations, endowment funds and trusts or qualified investor funds, as well as long-term management, protection and intergenerational transfer of private wealth, including family office governance.
Marek focuses on the legal and tax planning of family property possession and asset management. He is also an expert in acquisitions and real estate investments, intergenerational capital transfer and non-traditional investments, including investments in automobiles and works of art.
