A large part of the Spanish business fabric, and even more so the specific one of the Canary Islands, is made up of family businesses and SMEs: 1.1 million Spanish companies are family businesses, 89% of the total.
One of the most important challenges they currently face is ensuring a successful generational changeover. According to Jorge Fernández, partner at the law firm AF Legis, “the transition between generations is rarely simple, and only one in three families manages to complete it successfully, according to the experience of this law firm based in Barcelona.
Fernández points out that “the failure in the succession of these companies is due to a combination of factors that include lack of planning, family conflicts, absence of clear protocols and resistance on the part of the outgoing generation to cede control of the company.”
This reality, they explain, poses a direct threat to the continuity of thousands of businesses and, by extension, to the economy as a whole.
One of the main obstacles observed in succession processes is the lack of willingness to reach agreements between the parties involved.
The tension that these situations bring, the expert relates, can lead to family conflicts that, in many cases, lead to the fall of companies.
Disputes between siblings over the management of the company, a clash of egos, struggles to achieve greater recognition and, consequently, greater remuneration, are some of the most common “wars.”
Family business protocol
Faced with this type of situation, they recommend a preventive solution: the elaboration of a family business protocol.
It is a document that includes agreements and measures signed between the partners – united by family ties – with the aim of establishing clear rules of operation, distribution of responsibilities and decision-making.
This is stated in Royal Decree 171/2007, of February 9, whose objective is to regulate the relationships between family, property and company that affect the entity.
This protocol addresses agreements with content of family law, inheritance law and corporate law. Fernández insists that it is a great tool to ensure the continuity of the company “thus preventing, by chance, separations, divorces or deaths, the share capital ends up in the hands of people outside the family nucleus.”
This document also constitutes the way to establish mechanisms that determine the responsibilities and the role of each member of the family, the criteria and times to complete the succession in an orderly manner and the consequences of a hypothetical breach.
