Business succession: Real case. Businessman reticent to retire. As in the case of so many other Spanish SMEs, this successful Barcelona services company was founded and developed by an entrepreneur who, over the years and with his personal effort, had shaped him into a solid company Known and respected in the sector. This self-made-man entrepreneur, without superior training had managed to elevate his company based on his innate business sense and his nose for business.

Its policy to ensure the effective development of the three divisions of the company was to deliver shares to the three directors of each of them, so they were minority partners of the company.

As is also usual, when cash surpluses recurrently began, the entrepreneur began a diversification of investments in the real estate sector and also in the hotel industry.

In order to manage them he assigned family members according to him he believed they had the skills to do so. The hospitality division was assigned to her daughter by the fact that she spoke languages. In order to carry out the real estate management, he appointed his wife to the area of ​​rental housing and his sister to the one of industrial buildings, because they knew how to keep accounts and gave him confidence. His eldest son had already joined the company at the end of his studies and considered him the heir who should lead the group after his retirement. Of his two other minor children, one is working in London and another completing his university studies.

The problem was that at age 66 he could not find the time to retire and personally directed all aspects of the business, the family members being the pure executors of his instructions. His wife and sister were doing well because without him they would feel disoriented and their daughter was also convenient at a time in her life when she was with small children and partial dedication.

The frustrated was the eldest son, who had no development space under the patriarchal and omnipresent mandate of his father. He had not been assigned a specific charge but his father treated him as his secretary to carry out his instructions, curtailing his initiatives and often modifying the few decisions that allowed him to take. With this approach, the three partner directors paid little attention to him and only obeyed and respected the father.

It was the daughter who called us to explore the possibility of organizing a Succession Plan, worried about her brother and after talking with her father. At the initial meeting convened by the daughter according to the son, the father attended, who confirmed his intention to retire to be able to travel with his wife and stated that he liked the idea of ​​establishing a Succession Plan with a Family Protocol. But then he enthusiastically expounded his development projects for the future while instructing his children on how to develop them. Unconsciously, he made it clear that withdrawing was a mere intention for an indeterminate future and that his life was the company, which directed his air. The faces of his children, who already knew him, showed frustration and despair.

I then asked to continue the meeting alone with the father. We had a frank conversation where I explained clearly the importance of retiring in time and organizing his succession effectively. I asked him about his personal motivations and confirmed my impression that he was “hooked” to the company. I explained that most SMEs do not survive the entrepreneur for lack of an organized succession. I also exposed the risk of not properly educating and motivating their children, which is not only business but also can have family repercussions.

Finally I asked him if he had an accident the next day, what would happen to the company, the hotel and the real estate. He told me that he was calm because he had a well-defined will for the distribution of his property. Then I made him see that the problem is not the ownership of the stock but the management of the assets. Without adequate professional management, assets lose their value: the company run by its still inexperienced child would possibly conflict with the minority management partners who would not accept their authority and could go into losses to disappear or be broken up and distributed among the management partners, Hotel division was probably sold because the daughter is not currently qualified or willing to take her alone, and would only survive real estate assets. Is that what you would want for your children after having created a small empire with so many years of efforts? There was no response.

After a month he called me asking for a proposal to establish a Succession Plan with his corresponding Family Protocol. After six months of work and numerous meetings with him and the members of the family, the Protocol is finished, having solved the aspects discussed as follows:

A gradual and real delegation of the father’s functions to his children, establishing an effective date for his definitive retirement.

Gradually absorbed these functions in the company by the child, assigning a professional mentor to provide an external vision in addition to the internal know-how of the business, in order to accelerate their learning curve. All this ensuring the acceptance of the three managing partners

Recruitment of an external professional manager for the hotel division, since the internal know-how of the sector is incomplete, so that the daughter learns the hotel business from the hand of a professional without making mistakes.

Establishment of rules governing the company (Board of Directors) and the family that owns (Family Council), keeping the retired father as Honorary President all his life while enjoying his retirement traveling with his wife.

Definition of the policy of family work in the company to adapt the current situation of those who work to the new policy (rethinking the activity of the sister and the wife) and apply it to the other two brothers and the next generation.

Determination of a policy of dividends, investments and loans to accommodate all financial expectations of family members

Constitution of the rules of transfer of shares of the company, with all casuistry incorporated.

This entrepreneur finally saw the need to undertake the Plan of Succession in full powers, and now he is very satisfied, and even confesses himself relieved, with his decision. But unfortunately many other entrepreneurs have persisted in their reticence postponing it for a future that never arrives, until by circumstances of the life the process of the succession must be done in their absence or with their diminished faculties, which can generate conflicts that its presence In the process could have resolved with the authority that all grant him.


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