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  • Family business loses tax exemptions when owner does not work

    The Treasury eliminates the tax exemptions in the Wealth Tax foreseen for the family business in cases where the ownership does not work in the family business.

    The Directorate General of Taxes (DGT) has just established on 1 December in a resolution tougher criteria for accessing this tax benefit.  Until now, the owners of a family business were eligible when they stopped working in the business and the reins were taken over, for example, by their wife or children.

    This change affects family businesses in which the founder remains the owner of all shares, despite the fact that the management functions and economic activity are carried out by another family member.

    How to continue benefiting from these tax exemptions

    Following the change in the criteria of the Directorate General for Taxation, the key is that in order to be eligible for exemption from Wealth Tax, the shares in the family business must be held jointly. In other words, they must necessarily belong to more than one member of the family.

    There are currently many family businesses in which the founder has left the management of the business in the hands of a son or daughter, but still holds 100% of the shares in the company. If this is the case, he or she will now have to pay wealth tax on these shares. How can this be avoided? Simply transfer 1% of the shares to the son.

    From now on, in order to continue to benefit from this wealth tax exemption, the members of the business family in charge of the management must own at least 1% of the shares of the business.

    Of course, another option is for the father to keep 100% of the company, run it and make his salary from it his main source of income.

    Additional requirements 

    In order to benefit from this exemption, a number of additional requirements must be met on the date on which wealth tax is due. That is, on 31 December of each year:

    • The exempt assets and rights must be used for the pursuit of an economic, business or professional activity that is carried out habitually, personally and directly.
    • The economic, business or professional activity must account for at least 50% of the amount of the taxpayer’s general taxable income and savings income. This is a point on which tax planning is important, as it can vary from year to year.

    In the case of minors or incapacitated persons who are holders of the family business assets, in order to be eligible for exemption from Wealth Tax, the requirements must be met by their legal representatives.

    Deadline: 31 December

    This tax development has been made public just a few weeks before the deadline for filing the Wealth Tax for 2023, which is 31 December. It therefore has a major impact on the tax planning of many companies.

    The tax office will already apply this criterion for the 2023 tax year. So in these last days of the year it is urgent for many family businesses to make changes in the ownership of the business. The aim should be that at least 1% of the share capital passes into the hands of the second generation when it is the second generation that exercises the management functions.

    The expert tax advisory team at Confianz can help you in this process to review your business structure so that your family business continues to benefit from Wealth Tax deductions.

  • Can a company in insolvency proceedings continue its business?

    The reform of the Insolvency Act seeks to safeguard both the interests of creditors and the rights of debtors. This means that, in principle, companies that are forced to file for insolvency proceedings in order to resolve their insolvency situation do not have to interrupt their activity for the duration of the insolvency proceedings.

    Without prejudice to the precautionary measures that may be adopted by the judge when declaring the insolvency proceedings to guarantee the correct development of the insolvency proceedings and to protect the rights of the creditors, the insolvent party may carry out the acts that are essential for the continuation of its business activity. Even if the liquidation phase is reached, the law allows the continuation of the debtor’s professional or business activity if this is in the interests of the insolvency proceedings.

    However, this decision is subject to the approval of the insolvency judge. The ultimate goal is always to reconcile the interests of the insolvent party and the creditors, ensuring the proper development of the insolvency process and the satisfaction of legal obligations.

    Conditions

    In order to be able to continue the business during the insolvency proceedings, a number of conditions must be met:

    • The insolvent company must accept the insolvency administration. This will be responsible for supervising its actions to ensure compliance with legal obligations and to protect the interests of creditors.
    • It may only continue with those acts which are indispensable for the continuation of its business.
    • These acts must be in line with normal market conditions, must not harm the interests of creditors and must be subject to the supervision and control of the insolvency administration and the insolvency judge.

    Voluntary vs. necessary insolvency proceedings

    The conditions change depending on whether the insolvency proceedings are voluntary or necessary:

    • In voluntary insolvency proceedings, the insolvent company retains the powers of administration and disposal of its assets, but always under the supervision of the insolvency administration.
    • In an insolvency proceeding, the insolvent company’s powers of administration and disposal of its assets are suspended. These are taken over by the insolvency administration. It is the insolvency administrator who is responsible for the continuity of the company’s business activity.

    What does the supervision of the insolvency administration and the insolvency judge consist of

    The scope of intervention only extends to the assets and rights that are part of the insolvent party’s assets. However, at the request of the insolvency administrator, the judge may, at any time, issue a court order changing or even suspending the insolvent party’s powers over its assets. In this case, the insolvency administrator replaces the insolvent party in the exercise of his powers.

    The general authorisation of the administrator

    In order to speed up the acts, the Insolvency Act also provides for a general authorisation of the administrator for the acts or operations that are intervened. This avoids the administrator having to authorise each and every one of the specific acts that the insolvent party has to carry out.

    However, the acts remain under the supervision and subsequent control of the insolvency administrator. He can annul acts that have not been authorised. Either on his own initiative or at the request of creditors who have been affected by them.

    In a nutshell

    The ultimate aim of the Insolvency Act is to safeguard both the rights of debtors and the interests of creditors. To this end, it creates a regulatory framework that allows the continuity of professional or business activity during insolvency proceedings. However, provided that the established requirements are met and the acts are subject to the supervision of the insolvency administrator.

    If your company is close to filing for insolvency proceedings, Confianz’s specialist team can help you get through it in the best possible way.

  • Family office: the most efficient wealth management for business families

    Through a lot of hard work, the most successful business families end up generating a large financial and/or real estate wealth. In order to not only preserve it, but also to increase it and keep it in a single unit generation after generation, it is advisable to set up or contract a family office to manage it, taking into account the many variables: legal changes, legal procedures, family cohesion, etc. In this way, the management of wealth is clearly separated from the management of the business.

    The legal structure of the family office can be a limited company. It does not have to be the parent company of the group; indeed, it is advisable that it is not.

    Objectives 

    In order to respond to such a complex environment, the family office integrates administrators, tax specialists, financial advisors and legal experts. In this way, it can provide a global response to the challenge of preserving the wealth of a family from generation to generation through good wealth and financial management, tax planning, investment in new financial and non-financial assets, real estate management, etc. It is advisable that the leadership of the family is entrusted to a professional in the financial sector who has been hired for this purpose.

    For confidentiality reasons, in some cases the persons involved must be different from those in the family business.

    The most common tasks of the family office are:

    • Efficient wealth management: investments, taxation, pension plans, property management, etc.
    • Family respite planning.
    • Training new generations in heritage management.
    • Designing the overall investment strategy.
    • Organisation of Family Council meetings.

    Which business families need a family office

    It is advisable to set up a family office when:

    • The volume of assets is difficult to manage. In Spain it is usually more than 2,000 million euros.
    • A company is sold and the family has to organise the assets.
    • They earn very large amounts of money in a very short period of time and do not know how to manage it. This is common for example in the case of sportsmen or artists.
    • There is a high degree of financial complexity: equities, mutual funds, real estate, companies…

    But the family office is not just for the big fortunes on the Forbes list. Entrepreneurial families with smaller wealth often manage their wealth themselves or with the advice of a professional expert in finance and investment planning. Another option is to join with other business families in a multi-family office. In this case, starting assets can start at around 20 million euros.

    For their part, large fortunes tend to resort to the single family office, a type of exclusive wealth advisory service. Two paradigmatic examples are Pontegadea, the family office of the Ortega family, owner of the Indite group, and Omega Capital, owned by Alicia Koplowitz.

    How family offices invest

    It is up to the Family Council through the Family Strategic Plan to decide on the investment strategy and the acceptable level of risk. However, we can point out some common trends in family office investments.

    Given their lack of investment time horizons and the absence of external interference, family offices tend to invest in long-term funds. Most seek to acquire new assets similar to their existing holdings, but with a greater ability to hold them in perpetuity. The biggest enemy is inflation.

    If you would like to contract personalised and professional advice for the management of your family assets, Confianz will be delighted to help you.

  • Prosandbagging and anti-sandbagging clauses in M&A transactions

    In the context of M&A transactions, one should never neglect the possibility that the buyer is aware that a representation and warranty is false or inaccurate and, despite this, chooses to sign the contract in order to make a claim against the seller. This is where prosandbagging and antisandbagging clauses come into play.

    Where does the expression sandbagging come from

    In the sport of golf, a sandbagger is a player who plays underhand, who plays below his real ability in order to gain an advantage over his opponent. Because by lying about his skills, a sandbagger gets a better handicap. This allows him to have more strokes and thus increases his chance of victory.

    Similarly, in a corporate sale and purchase, the term sandbagging refers to the situation where the buyer becomes aware that a representation and warranty is false or inaccurate. This information can usually be obtained through due diligence, but can also be obtained in any other way. Despite this, he chooses to sign the M&A contract and then holds the seller liable.

    What are prosandbagging and antisandbagging clauses

    In view of this possibility, the two parties are increasingly regulating their position with regard to sandbagging in order to avoid future disputes. If a dispute arises, the judge or arbitrator will take into consideration the common intention of the parties.

    These are the most commonly negotiated clauses in M&A contracts:

    • The anti-sandbagging clause, which provides that the buyer may not recover for any non-performance of which he had or could have had knowledge. In other words, prior knowledge will prevent the buyer from claiming damages. This is the most common type of clause in Spain.
    • The prosandbagging clause, which works the other way around and provides that the buyer’s right of indemnification is not limited by the knowledge he may have or may have obtained in the framework of the statutory audit. In other words, prior knowledge on the part of the buyer will not affect the seller’s liability.

    How to act in the event of a prosandbagging dispute

    Although the prosandbagging clause is common, there is no consolidated Supreme Court case law on its effectiveness. This requires a case-by-case analysis, taking into account all the circumstances of the transaction and what was agreed by the parties in the purchase contract.

    If the buyer detects a contingency during the due diligence process and, under the cover of a prosandbagging clause, decides to claim the damage from the seller, he may invoke in his defence the autonomy of the will of the parties, the work of allocation and distribution of risks in the operations of these clauses or the assimilation of the clause to a promise of guarantee by the seller. In our opinion, the most advisable thing to do in these cases is to negotiate a reduction of the price or to agree on a specific indemnity. In the specific indemnity it will be important to regulate how the damage will be quantified if it materialises and to foresee the possibility of claiming the damage as soon as it can be quantified, even if there has not been an effective disbursement.

    On the other hand, the seller can argue that the buyer’s action is contrary to contractual good faith, that it is an abuse of rights or that the buyer gave tacit consent to this contingency because he knew about it before signing the contract and did not demand a specific indemnity to cover it. In order to prevent such situations, we recommend that sellers deposit the due diligence information with a notary, so that they can prove exactly what information the buyer had access to.

    Key clauses to manage the risk of the operation

    These are clauses that require arduous negotiation between seller and buyer, as they play a significant role in the allocation of risks. Confianz’s team of M&A specialists has extensive experience in mergers and acquisitions and can accompany you throughout the entire process with maximum guarantees.

  • BEFIT Directive: European Commission proposes new corporate tax base

    On 12 September, the European Commission published the «Proposal for a council directive on Business in Europe: Framework for Income Taxation» (BEFIT). Its two main objectives are ambitious: to reduce tax compliance costs for large cross-border companies in the EU and to harmonise transfer pricing rules within the EU.

    Objectives 

    There are currently 27 different corporate tax regimes in the EU for groups of companies with an annual consolidated income of more than EUR 750 million. This forces multinational companies to face high complexity and costs in their operations. In addition, it gives rise to problems such as profit shifting, tax avoidance, litigation, double taxation cases…

    Now, the proposed BEFIT Directive seeks to introduce a common framework for corporate taxation across the EU. The objectives are:

    • Simplify the practice and management of corporate taxation in the internal market.
    • Create a level playing field.
    • Strengthening legal certainty.
    • Reduce tax compliance costs for large companies operating in more than one Member State by up to 65%.
    • Encourage companies to operate on a cross-border basis.
    • Stimulate investment and business growth in the Union.
    • Facilitate the national tax authorities’ assessment of taxes due to them.

    What the BEFIT Directive proposes

    The proposed BEFIT Directive foresees that its rules will be mandatory for groups operating in the EU with combined annual revenues of EUR 750 million or more, and where the ultimate parent entity owns at least 75% of the ownership rights or rights giving entitlement to benefits.

    In these cases, companies that are part of the same group:

    • They shall calculate their tax base on the basis of a common set of tax adjustments.
    • They will aggregate their tax bases into a single aggregated tax base. Cross-border loss relief will thus apply, as losses will be automatically offset against cross-border profits.
    • They will be entitled to a percentage of the aggregate tax base calculated on the basis of the average of the taxable results of the three previous tax years.

    The proposal builds on the OECD/G-20 international tax agreement on a global minimum level of taxation and the Pillar Two Directive adopted at the end of 2022.

    What the BEFIT Directive is NOT

    The Proposal for a BEFIT Directive does not entail a change or harmonisation of tax rates. It simply proposes a system of common computation of the tax base of groups of companies so that, subsequently, each Member State applies the corresponding rate.

    When will the BEFIT Directive enter into force

    The BEFIT Proposal for a Directive replaces two previous Commission proposals, which are withdrawn. These are BICIS (Common Consolidated Corporate Tax Base) and CCCTB (Common Consolidated Corporate Tax Base).

    At Confianz we always recommend companies to anticipate tax changes. So now you need to know that, if the BEFIT Directive is approved as currently proposed, EU member states will have to transpose it by 1 January 2028 at the latest. Thus, the new rules will apply from 1 July 2028.

  • »’Leaders League

    La excelencia no es un logro único sino un viaje continuo. En Confianz, este viaje está marcado por una búsqueda incansable de la perfección y un compromiso inquebrantable con nuestros clientes. Hoy, queremos compartir con vosotros algunos de los hitos recientes que nos motivan a seguir avanzando y mejorando cada día.

    Reconocimientos que Inspiran

    El año ha sido significativo para nosotros. Una vez más, nuestra firma ha sido destacada en la edición 2024 de «The Best Lawyers in Spain», un logro que no solo refleja nuestra dedicación y esfuerzo, sino también la confianza y el respeto de nuestros colegas de profesión. Este año, es con especial orgullo que celebramos el octavo reconocimiento consecutivo para Manuel Urrutia en Corporate-M&A y el quinto para Álvaro Mendiola en Tax Law. Estas distinciones subrayan la constancia y la maestría con la que nuestros profesionales abordan cada desafío.

    Un Lugar entre los Mejores

    Más allá de los reconocimientos individuales, este año, y por tercero consecutivo, hemos sido honrados por el prestigioso Ranking Leaders League, que ha resaltado nuestra firma en la categoría de Corporate-M&A. Este reconocimiento es testimonio del trabajo en equipo y de la solidez de nuestra práctica corporativa.

    Hacia un Futuro de Éxito Compartido

    Cada reconocimiento que recibimos y cada éxito que celebramos, es, en última instancia, un reflejo del éxito de nuestros clientes. En Confianz, no perdemos de vista que nuestro mayor logro es la confianza que cada cliente deposita en nuestra firma. Esa confianza nos impulsa a mejorar, a innovar y a ofrecer un servicio que no solo cumpla con las expectativas, sino que las supere.

    Agradecemos a todos nuestros clientes y colegas por ser parte de este viaje y  prometemos que seguiremos trabajando con el mismo compromiso y pasión que nos han traído hasta aquí. La excelencia es nuestro camino elegido, camino que recorremos a vuestro lado.

    Si deseas que te asesoremos en materia de Corporate y Legal, contacta con nosotros.

  • Pricing and the locked box mechanism in M&A transactions

    In M&A transactions, the choice of the transaction pricing mechanism is key. Until recently, the locked box mechanism was mainly used in the United States. In recent years, however, this methodology has gained increasing acceptance in Europe, especially in competitive processes with several potential buyers. This is because this system significantly simplifies the drafting and negotiation of the sales contract.

    How does the locked box pricing system work

    The locked box involves the establishment of a closed price, not subject to adjustment at closing with few exceptions. This price is fixed in the purchase contract by reference to previous financial statements, closed at the locked box date. This date is not established after the closing of the transaction but before.

    Thus, at the time of signing, the risks of the business are transferred. The contract states that the company will continue in its normal course, but provides for certain restrictions that protect the buyer against a loss of value that may occur between the date of the locked box and the closing date.

    What kind of leakages to avoid

    This protection is articulated through the concept of leakage of value. Any transaction that involves the decapitalisation of the company is prohibited. For example, the payment of dividends, the cancellation or reduction of debts, the sale of fixed assets at below-market prices, etc. In practice, the buyer would be receiving less value than he has paid.

    Hence the name locked box: from the moment the two parties agree on a fixed price the box must remain locked.

    What leakages are allowed

    Permitted leakages, which are transactions known to both parties in advance and which have already been taken into account in the fixed price, are also often defined in the contract as reasonable exceptions. For example, wages and remuneration established in employment or service contracts, payment commitments assumed in the ordinary course, etc.

    It is also necessary to regulate the normal running of the business in the time between signing and closing of the transaction. During this period the seller continues to manage the day-to-day business. For this reason, it is common for the seller to charge the buyer a fee for this period. At Confianz we recommend agreeing an interest rate on the price.

    Advantages of the locked box mechanism

    • Avoid complex financial definitions, adjustment mechanisms, arbitration, etc.
    • It provides price certainty.
    • It saves time and costs by avoiding the need to close additional financial statements.
    • It is more appropriate in competitive processes where several candidates are competing for the purchase, as the comparison of offers will be more homogeneous.

    The locked box is generally considered to be a favourable pricing system for the seller, as it provides the certainty of a fixed price and avoids the occurrence of disputes in subsequent revisions.

    Limitations 

    However, the locked box method requires an in-depth analysis of the financial statements. If the locked box date is close to the annual financial close, the audited annual accounts will be used. Otherwise, the vendor will have to prepare ad hoc financial statements.

    In both cases, however, thorough due diligence is required to ensure reliability. Therefore, it is not advisable to use it in situations where the buyer is unable to carry out in-depth due diligence.

  • New Carbon Border Adjustment Mechanism (CBAM) for EU importers

    The European Union’s firm commitment to environmental protection and the fight against climate change has materialised over the last few years in ambitious regulations. For example, the greenhouse gas emissions trading scheme, which aims to ensure that products manufactured in the EU incorporate the cost of the carbon emitted in their production.

    These regulations have raised concerns about the risk of carbon leakage. This concept refers to the fact that EU levies can lead to a relocation of production to other countries with fewer environmental restrictions. This could even lead to a global increase in carbon emissions.

    Level playing field for European and imported products

    To address this risk, the Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishes a Carbon Border Adjustment Mechanism (CBAM). Under it, certain imports may only be made by persons or companies that have the status of authorised declarant and purchase sufficient certificates to cover the emissions implicit in the imported goods.

    Ultimately, the CBAM aims to ensure that imported products are subject to a regime that applies carbon costs similar to those borne by products manufactured in the EU.

    This is a new development that will be implemented in the coming years. At Confianz we are helping our clients to analyse it in depth, as in some cases it could mean a loss of profitability that could endanger the business.

    Obligations of EU importers

    The Carbon Border  Adjustment Mechanism (CBAM) is similar to emissions trading schemes. This instrument requires importers:

    • Obtain authorised declarant status prior to import;
    • Declare the implied emissions of imported goods;
    • Ensure that the declared emissions are verified by an accredited verifier;
    • Acquire and present the relevant certificates.

    To which goods does the CBAM apply

    The CBAM applies to goods that meet two conditions:

    • They are listed in Annex I of the Regulation. That is to say, those corresponding to the cement, electricity, fertilisers, foundry, iron, steel, aluminium and hydrogen sectors. Products processed from these goods as a result of inward processing arrangements are also concerned.
    • They originate in a non-EU country. However, goods from Iceland, Liechtenstein, Norway, Switzerland, Büsingen, Heligoland, Livigno, Ceuta and Melilla are excluded from this rule.

    How CBAM works

    As we have already seen, persons or companies wishing to import goods affected by the CBAM are obliged to register as an authorised declarant in the CBAM Register. In this way, they obtain a unique CBAM account number, which is essential for the customs authorities to allow the import.

    Each year, by 31 May at the latest, authorised declarants must submit a declaration for the previous calendar year, indicating:

    • The total quantity of each type of imported goods.
    • The emissions implied by such goods validated by an accredited verifier.
    • A copy of the verification report issued by an accredited verifier.
    • The total number of CBAM certificates to be delivered within the same timeframe.

    When does the CBAM enters into force

    Between 1 October 2023 and 31 December 2025, a transitional period is opened in which the importer must already submit a quarterly report on imported goods to the Commission.

    From 31 December 2024, the provisions concerning the application for and granting of authorised declarant status shall apply.

    From 2027 onwards (for 2026 operations), reporting of implied emissions and surrender of CBAM certificates will be mandatory.

    For further details, please contact us.

  • The new grounds for null and void dismissal that you need to know about

    Since the end of June, Royal Decree-Law 5/2023 of 28 June has been in force, the text of which includes the transposition of the European Union Directive on the reconciliation of family and professional life for parents and carers. For employers, the regulation introduces new grounds for nullity of dismissal, both objective and disciplinary.

    Specifically, Royal Decree-Law 5/2023, of 28 June, amends articles 53.4 and 55.5 of the revised text of the Workers’ Statute Law. It does so with the aim of protecting the right of workers to take their work-life balance leave without being dismissed for doing so.

    The fact of expressly amending these articles is not trivial. In this way, dismissal for having taken such leave is expressly elevated to the category of objective or automatic nullity. This means that if the company fails to prove that the dismissal is justified, it will be declared null and void.

    Directive protecting parents and carers transposed

    Directive protecting parents and carers transposed

    This is a transposition of the European Directive 2019/1158 of 20 June 2019 on reconciling family and working life for parents and carers. In its Article 12 («Protection against dismissal and burden of proof»), this Directive expressly states that «Member States shall take the necessary measures to prohibit the dismissal and any preparation for dismissal of a worker on the grounds that he/she has requested or taken leave referred to in Articles 4, 5 and 6, or time off work referred to in Article 9».

    What exactly do you mean?

    • Articles 4, 5 and 6 refer to paternity, parental and carer’s leave of five days for illness or hospitalisation.
    • Article 9 refers to flexible working arrangements.

    New grounds for nullity of dismissal

    In both objective and disciplinary dismissals, the renewed Workers’ Statute adds new grounds for nullity. Thus, dismissal is null and void for:

    1. Employees during periods of suspension of the employment contract due to childbirth, parental leave or illness caused by pregnancy, childbirth or breastfeeding. Also when the period of notice granted ends within these periods.
    2. Pregnant workers.
    3. Persons who have requested the five days of paid leave due to serious accident or illness, hospitalisation or surgery without hospitalisation requiring home rest of the spouse, unmarried partner or relatives up to the second degree of consanguinity or affinity, including the blood relative of the unmarried partner, as well as any other person other than the above, who lives with the worker in the same home and who requires the effective care of the worker.
    4. Persons who have applied for or are taking the leave referred to in the aforementioned Articles 4, 5 and 6.
    5. Workers who have requested or are benefiting from the adaptations of working hours for reasons of reconciliation or the leave of absence provided for in Article 46.3.
    6. Female workers who are victims of gender-based violence for exercising their right to effective judicial protection or comprehensive social assistance.

    The changing labour regulations, which, as we have seen, directly affect the General Workers’ Statute, make it almost essential for most companies’ Human Resources departments to have external legal advice. At Confianz we can accompany you and avoid costly conflicts in time and money.

  • Lack of generational turnover drives M&A among companies

    Generational succession has always been a critical process for family businesses. Seventy percent of them do not make it to the second generation, and 90% do not make it to the third. This intrinsic difficulty for this type of company is now compounded by the ageing of the population. The large baby boom generation born between 1946 and 1964 is reaching retirement age, and with it many founders and heirs of family businesses are retiring. Even in the case of successful companies, many are finding it difficult to find someone willing to take over the reins.

    It is currently estimated that there are more than 1.1 million small and medium-sized family businesses in Spain with no generational succession. And between now and 2030 we will see many more family businesses failing to find an heir interested in continuing the business tradition. This entails a serious risk of closure, with the consequent loss of wealth and jobs. The Workers’ Statute establishes procedures for the termination of the company due to the retirement of the employer, which could result in collective or individual dismissals.

    Dealing with the lack of generational succession

    Faced with the challenge of the lack of generational succession and the strong personalisation of corporate culture, family businesses are opting for a variety of solutions:

    • A gradual transition, extending the active retirement of entrepreneurs and allowing them to continue to perform some functions for a more or less long period. According to Social Security data, more than 57,000 self-employed have used this modality to continue running their businesses.
    • The hiring of external directors to manage the company, keeping ownership in the hands of the family.
    • The sale of the company.

    The boom in corporate transactions in family businesses

    The enormous weight of family businesses in Spain is similar to that in Japan. And in this country, the lack of generational change has driven M&A operations to double-digit growth in the last 10 years. This is probably the scenario for which we must prepare ourselves in our country.

    On the one hand, mergers and acquisitions help to extend the life of companies beyond the involvement of the business family. On the other hand, they help other companies to grow in size and become more resilient.

    A paradigm shift in business families

    Family businesses are no longer as conservative as they were a few years ago, and have lost their fear of the entry of capital from a financial partner. As for the fear of losing control, this has also been overcome. We are seeing more and more operations in which the founding partner remains a minority shareholder.

    There is definitely a change in mentality. Selling the family business is no longer something almost shameful, but a symptom of success. We see this especially in the start-up culture, many of which are sold to a larger company or private equity fund when they reach a critical size.

    On the other hand, the economic crises of recent decades have made many family businesses realise that size is key to business survival. And growing exclusively organically is becoming increasingly difficult.

    All these circumstances lead us to expect a lot of merger and acquisition activity of family-owned companies in the coming years. We are going to see many companies that are leaders in their market niches come onto the market. At Confianz we are prepared to accompany them in these processes.