Confianz

Etiqueta: protocolo familiar

  • ‘s new Family Business Law

    The Community of Madrid recently announced a Family Business Support Act. At Confianz, after years of advising on succession processes and seeing how many viable companies fell by the wayside, we believe that this regulation comes at just the right time. But beyond the headlines, what does it really mean for your family business? Let’s analyse it from our experience in the field.

    The figures that explain why urgent action was needed

    There are 450,000 family businesses in Madrid. They represent 93% of the region’s entire business fabric, generate 65% of GDP and employ 60% of private sector employees. If you work in Madrid, you most likely work for a family business or with a family business as a client or supplier.

    But there is one fact that keeps us awake at night as advisors, and that is that only 33% of family businesses survive into the second generation, and barely 15% make it to the third. We are not talking about unviable or poorly managed businesses. We are talking about profitable companies that disappear due to tax problems, poorly managed family conflicts or a lack of succession planning.

    Every month at Confianz, we see cases of solvent companies that are forced to sell or close because the tax bill for succession is impossible to bear without decapitalising the business. We have seen siblings at odds due to a lack of prior agreements, children who do not want to continue the business without a plan B, and entrepreneurs who postpone succession until it is too late.

    What really changes with this law

    1. Taxation: less pressure where it hurts most

    Inheritance tax has historically been the great enemy of business continuity. Inheriting a business should not mean having to sell it to pay taxes, but that has been the reality for many families.

    What changes now:

    • Reduction from 95% to 99% in the tax base for inheritance and gift tax
    • Extension of the 95% allowance to uncles and nephews, with no conditions regarding the existence of a spouse or descendants
    • Expansion of the concept of a family business to include uncles and nephews in the required 20% shareholding

    What does this mean in practice? Let me give you an example: a company valued at €2 million that is passed on from parents to children paid, with the 95% allowance, around €100,000 in taxes. With the new 99% rebate, that figure is reduced to €20,000. It is the difference between being able to take over the business or having to seek external financing that compromises the business.

    For nephews and nieces who inherit the business from an uncle with no descendants, the change is even more dramatic. Until now, the tax burden was much higher. With the new regulations, it is practically the same as for direct descendants.

    2. Succession without a family replacement

    One of the most complex problems we deal with at Confianz is when the founder wants to retire but none of their children want to or are able to continue the business. The company is viable, it has a team, customers, structure… but it has no future due to a lack of a successor.

    The solution proposed by the law: A platform that will connect companies without generational succession with external professionals interested in continuing the business. It is an innovative concept that already works in other countries: the institutionally facilitated «management buyout».

    Our experience: We have managed cases where a trusted manager or even a competitor could have continued the business, but the lack of financing, ignorance of options or simply the absence of a framework to facilitate the process made it impossible. This platform could be the missing link.

    3. Family mediation

    This is where one of the most sensitive aspects comes in: the family.

    What the law provides: A specialised public family mediation service. This is not family therapy, but professional mediation focused on finding business solutions that respect family dynamics.

    Why it is important: In our experience, 70% of inheritance disputes are not really about money, but about recognition, perception of justice or lack of communication. A professional mediator can avoid years of litigation that destroy both the business and the family.

    4. Professionalisation

    Many family businesses operate with informal structures that worked when they were small but become a burden as they grow. Lack of protocols, absence of professionalised governing bodies, confusion between family and business assets…

    The aid provided:

    • Grants to hire consultants specialising in succession processes
    • Funding for training specific profiles
    • Support for modernisation and digitalisation plans

    Our recommendation: Take advantage of this aid before it becomes urgent. A family protocol cannot be drawn up in three months when the founder is 75 years old and has health problems. It takes time, consensus and a vision for the future.

    5. Funding for growth

    The average size of Spanish companies is one of the major constraints on competitiveness. Many family businesses could grow, but the leap requires investment, and traditional investment (sale of shares, injection of funds) clashes with the desire to maintain family control.

    What the law offers: Specific lines of credit for the acquisition of productive assets, land or strategic investments.

    Where we see it as critical: Companies that need to make the leap to automation, internationalisation or digitalisation but do not want to take on debt under market conditions or dilute their capital. These lines of credit may be the necessary push.

    What the law does not solve 

    Let’s be clear: no law, however good it may be, can replace planning. In our office, we constantly see the same mistakes:

    1. Postponing the conversation about succession «We’ll talk about it when the time comes» is the most expensive phrase in a family business. Succession is planned 5-10 years in advance, not when the founder turns 70.
    2. Not having a family protocol Only 15% of Spanish family businesses have a protocol. It’s like driving without a seatbelt: as long as nothing happens, nothing happens. But when it does…
    3. Confusing family and business roles Being a child does not automatically make you the best CEO. Being the founder does not mean you should continue to make all the decisions at 75.
    4. Not professionalising governance Boards of directors where everyone is family, with no independent directors, no specialised committees, no performance evaluation… It’s a recipe for stagnation.
    5. Ignoring key non-family members That financial director who has been there for 20 years, that salesperson who brings in 40% of the turnover, that production manager who knows every process… If they are not in the succession plan, they will leave when you need them most.

    The family business seal

    The law provides for the creation of a distinctive seal for family businesses. It may seem anecdotal, but it is not. Identifying yourself as a family business can be an important commercial asset.

    Think about it: when you choose a supplier, do you prefer a company with three generations of experience and local roots, or one that may close its British branch tomorrow if the next quarter’s figures are not up to scratch? Customers are increasingly thinking the same way.

    The opportunity of the decade

    This law comes at a critical moment. The founders of the business boom of the 1980s and 1990s are reaching retirement age. It is the largest generational transfer of wealth and business control in Spain’s recent history.

    According to ADEFAM, with just €2.5 million in public investment, this legislation could mobilise between €20 million and €45 million in private investment in the first year, preserve between 15,000 and 45,000 jobs, and facilitate the creation or modernisation of up to 1,200 family businesses.

    But these figures will only become a reality if family businesses actively take advantage of them. It is not enough for the law to exist. It is necessary to plan, act and, above all, start now.

    As you know, at Confianz we have been helping family businesses with succession, optimising their taxation and professionalising their operations for years. This law opens up opportunities that did not exist before, but only for those who know how to take advantage of them.

    If your family business is in Madrid, if you are thinking about succession, if you want to optimise your tax structure or simply want to know how these changes affect you, let’s talk. Because the best legacy you can leave is not only a profitable business, but a business that is prepared to last.

    The law puts the tools on the table. Now it’s time to use them well.

    Would you like to know how this law affects your family business? Contact our team of family business specialists.

  • Key points for preparing your family business for restructuring

    In Spain, family businesses are the backbone of our economy: more than 1.1 million companies representing 92% of the business fabric and generating 70% of private employment. With such significant figures, any restructuring process in this sector has a fundamental impact not only on the business families themselves, but on society as a whole.

    However, the reality is stark: only 29.3% of family businesses manage to survive at least one generational change, and barely 1.2% reach the third generation. Recent cases such as Celsa, Naviera Armas and Rator remind us that poor planning can lead to loss of family control, destructive conflicts and erosion of business value.

    Anticipating restructuring is a necessity if you want to protect the value, continuity and legacy of your company, as we have also explained in our video podcast. This list will help you prepare for an orderly, efficient restructuring with control over the process.

    1. Analyse your financial situation objectively

    Before making any structural changes, you need a complete, unfiltered financial overview. Review your current liquidity, debt levels, operating cash flow and profit margins. Do not settle for the data you already know: request independent analyses that include optimistic, realistic and pessimistic projections.

    Practical tip: Prepare an up-to-date financial dossier that you can present to potential investors, partners or financial institutions. In 2023, 43% of mergers and acquisitions in Spain involved family businesses, demonstrating the constant activity in this sector.

    Checkpoint: Are you clear about your self-financing capacity for the next 24 months?

    2. Assess the corporate and governance structure

    Your current structure may be a legacy of the past, not the solution for the future. Review whether the share distribution, shareholder agreements and family protocols are aligned with your current objectives. Many family businesses have complex structures that hinder agile decision-making.

    Practical tip: Map out who has real decision-making power, who can block operations, and what mechanisms exist to resolve conflicts. If there is no up-to-date family protocol, developing one should be a priority.

    Checkpoint: Does the current structure facilitate or complicate the strategic decisions you need to make?

    3. Prepare a tax assessment prior to any changes

    Tax surprises can ruin even the best restructuring. Anticipating this means identifying potential hidden capital gains, optimising asset transfers and assessing the tax implications of mergers, spin-offs or changes of control. A poorly executed spin-off can generate unnecessary tax costs that compromise the entire operation.

    Practical tip: Work with tax advisers who specialise in family businesses to model different restructuring scenarios. Each alternative should include its actual tax impact, not just the operational advantages.

    Checkpoint: Do you know the tax cost of each restructuring option you are considering?

    4. Assess your workforce and internal leadership

    Even the best restructuring plan will fail without the right team. Assess whether your current workforce, especially the management team, can sustain a new phase or operating model. Internal conflicts and a lack of prepared leadership are common causes of failure in restructuring.

    Practical tip: Identify key professionals whose departure could jeopardise the operation. Develop specific retention plans and assess whether you need to bring in external talent for critical roles.

    Checkpoint: Do you have the leadership necessary to execute and sustain the planned changes?

    5. Communicate clearly and in a timely manner

    Lack of internal communication breeds resistance, talent drain and destructive rumours. Poorly communicated restructuring can become a self-fulfilling prophecy of failure. Employees, partners and stakeholders need to understand not only what is going to change, but why it is necessary and how it affects them.

    Practical tip: Design a communication plan with differentiated messages for each audience: business family, employees, customers, suppliers, and financial institutions. Involve key leaders from the beginning of the process.

    Checkpoint: Do you have a structured communication plan that prevents speculation and rumours?

    6. Consider the family and generational context

    Almost 70% of family businesses do not survive the first generational handover. Unresolved family tensions can explode during a restructuring, turning a business process into a destructive personal conflict. It is essential to separate family dynamics from business decisions.

    Practical tip: If there are underlying family conflicts, resolve them before beginning the restructuring. Consider professional family mediation and establish clear decision-making mechanisms that do not depend on complex family consensus.

    Checkpoint: Are family relationships an asset or a risk to the restructuring process?

    7. Design a structured plan with timelines, responsible parties and scenarios

    Restructuring without a plan is costly improvisation. You need a clear roadmap with specific milestones, defined responsibilities, and alternative scenarios. Planning in advance is always better than deciding in a crisis, when options are limited and costs multiply.

    Practical tip: Develop a realistic timeline that includes time for negotiations, due diligence, legal procedures, and organisational adaptation. Each phase should have measurable success criteria and review points.

    Checkpoint: Do you have a detailed plan that you can follow and adjust as circumstances evolve?

    8. Seek legal, tax and financial advice from the outset

    The cases of Celsa, Rator and Naviera Armas demonstrate the serious consequences of inadequate planning. Reactive restructuring, managed under pressure from creditors or crises, dramatically limits options and can result in the loss of family control.

    Practical tip: Seek out advisors with specific experience in family businesses and restructuring. Not all professionals understand the particularities of managing family and business interests simultaneously. The difference between planned and reactive restructuring can be the survival of your business.

    Checkpoint: Do you have a comprehensive advisory team that understands both the technical aspects and family dynamics?

    Your next step

    A well-prepared restructuring preserves value, talent, control and family legacy. On the contrary, failing to anticipate can lead to destructive conflicts, costly litigation, loss of control and an unnecessary tax impact that compromises the future of your company.

    Remember that in a planned restructuring, you maintain control of the process and decisions. In a reactive one, others set the timing, conditions, and outcomes.

    Does your family business need to reorganise or prepare for a new phase?

    At Confianz, we can help you structure the process with a global vision and a practical approach. Request a personalised diagnosis.

  • Alignment between ownership and management in family businesses

    In Spain, according to recent data, up to 30% of business activity may be compromised by a lack of understanding between owners — often members of the founding family — and professional managers. This disconnect, invisible in day-to-day operations, often emerges at critical moments: a merger, an acquisition, a succession. This is when the lack of structure turns into conflict, and tradition clashes with efficiency.

    The silent risk of dual governance

    Family businesses operate according to a dual logic: on the one hand, the owning family, with its values, history and personal expectations; on the other, the executive management, responsible for making decisions based on profitability, growth and sustainability. In theory, both sides should be aligned. In practice, this is not always the case.

    Dual governance creates tensions when there is no clear structure. For example, it is common for family members to demand results without actively participating in management, or for managers to have their decisions questioned by those who do not hold formal positions. In M&A processes, where agility and strategic focus are vital, these frictions can delay key operations or even cause them to fail.

    The problem is not the existence of this duality, but its disorganisation. Alignment between ownership and management in family businesses requires mechanisms that channel family participation without interfering with professional management.

    A critical snapshot of family businesses in Spain

    Understanding the root of the problem requires looking at the present. Fifty-three point six per cent of family businesses in Spain are in their first generation, and 37.2 per cent are in their second. Only a meagre 2 per cent survive to the fourth generation. This is not due to a lack of talent or vision, but rather to a lack of institutional preparation for succession.

    Seventy per cent of first-generation family businesses lack a succession plan. The result? Conflicts, improvised decisions and operational paralysis.

    At the same time, these same companies are key players in the market: in 2023, 43% of mergers and acquisitions in Spain were carried out by family businesses. They even surpassed private equity and large corporations. This demonstrates two things: their relevance and their vulnerability.

    When a family business enters an M&A process without clear governance, the risks multiply. The lack of alignment between ownership and management in family businesses can slow down decisions, divide partners and dilute the value that took so much effort to build.

    Consequences of internal misalignment

    The lack of alignment between ownership and management in family businesses has tangible consequences, which are sometimes irreversible. A recurring example is strategic decisions being blocked by generational differences. Parents want to keep the business as it is, while children are committed to growth through acquisitions. Without clear rules, immobility wins. Or worse: a breakup occurs.

    In other cases, the absence of a family protocol leads to legal disputes. Companies that could have grown or diversified their activities end up being sold to third parties because of an inability to agree on a common direction. Emotional value is not enough when there are no mechanisms in place to resolve disagreements.

    There are also situations where professional managers leave the company because their judgement is constantly questioned by family members with no training or executive responsibilities. The loss of management talent in these cases costs more than a bad investment.

    These conflicts do not arise overnight. They are the cumulative symptoms of poor governance. And their cost is extremely high: not only in economic terms, but also in terms of reputation and emotion.

    Professionalisation and clear structures

    Alignment between ownership and management in family businesses does not happen by inertia. It requires specific decisions. The first is to professionalise management. This involves bringing in external managers with experience and, above all, objectivity. It is also key to integrate independent directors into the board of directors to provide strategic vision beyond the family name.

    The second step is to clearly define roles. Who makes decisions? What powers does the family have? What powers does management have? This is where the family protocol becomes indispensable. When well designed, it acts as a coexistence agreement: it regulates expectations, sets rules for participation and establishes mechanisms for resolving differences without taking them to a personal level.

    The third pillar is the corporate structure. Many family businesses operate as if they were sole proprietorships, but growth requires more solid vehicles. The creation of a family holding company allows for the separation of operational management from asset management, facilitates generational succession and optimises taxation. It also allows for professionalisation without losing control.

    Govern with vision and without fear

    Aligning ownership and management in family businesses is the main strategic challenge of our time. It is no longer enough to have good products or a history of success. What ensures continuity is the ability to transform that legacy into a functional, clear and future-proof structure.

    At Confianz, we have been supporting family businesses in this process for years. With solutions tailored to their reality, their values and their long-term vision. If your company is facing this dilemma, don’t put it off. Let’s talk.