The major challenge facing family companies seeking to achieve continuity, growth and permanence over time is institutionalisation. 60% of these companies do not survive the second generation and 85% do not survive the third. The main reasons are commercial competition, selling off the company and family disputes. That is why the strategy we follow in our family business service focuses mainly on:
- Assessing where the company’s and family’s economic strength lies.
- Defining an appropriate distribution and access to the company’s profits.
- Having the legal means in place to keep the business running.
- Having clear, legally defined procedures for investors to sever ties with the company.
- Making the profits/losses and strategic decision-making transparent.
- Defining the succession strategy for the next generations.
- Supporting the effort put into day-to-day operation through independent, results-focussed management.
We seek to:
- Understand the shareholders’ concerns and expectations in order to draw up an action plan.
- Implement the activities set out in the plan.
- Monitor them for a previously agreed period of time to ensure that the shareholders’ expectations are satisfactorily met.
- Institutionalisation of the family business.
- Differentiating between the company and family.
We think that in order to achieve permanence such companies should base their strength on the united economic power of the family members in order to carry out more economically robust,
complete and versatile business, with greater geographical coverage, which will be passed down to the next generations.
Sabría & Gabarró give shareholders personal attention in order to find solutions to their concerns by seeking to:
- Keep the economic power united by the members holding a sustainable stake based on what the founder or the currently controlling group decides.
- Set up representative but efficient decision-making processes.
- Put rules in place for access to the cash flow by the family members.
- Give the structures flexibility to accommodate the family members’ future needs.
- Establish competent, professional management to tackle changing business environments and circumstances.
- Apply corporate governance best practices to the family firm.