The value of interim management in family businesses

The importance of family-run businesses to the economy means that we need to bring in specialists in succession planning who act independently and ensure the continuity and stability of these organisations, which are vital to the stability of a country such as Spain.

Madrid, 3 May 2023

According to the Family Business Institute, in Spain, more than one million businesses are family-owned – 89 per cent of the total – and they account for 67 per cent of private-sector employment (more than 6.58 million jobs). In short, they account for 57.1 per cent of private-sector GDP, making them the country’s largest source of employment.

However, the importance of family businesses to the economy is not limited to Spain alone. According to the same source, there are fourteen million family businesses in the EU, generating sixty million jobs. As for the US, this type of business accounts for 80 per cent of the business sector and generates 50 per cent of private-sector employment. From all this, we can conclude that this type of business is essential for sustaining economies worldwide.

The main challenge facing family businesses is the succession process, which must be managed well in advance and agreed upon by all members of the business family. This process can be managed from within the family structure itself or by engaging external professionals with expertise in the field, whether through mentoring the future heirs or by providing project management. In both models, interim management firms can prove extremely useful, as they address the issue from outside the family structure, with complete independence and neutrality. The interim manager assigned to the succession project may be responsible for designing the ‘succession plan’ and implementing it, or simply for implementing the plan that the family business, either on its own or with external advice, has already drawn up.

More than a million Spanish companies are owned by business families, which account for 67 per cent of private-sector employment.

Succession plans can be as simple or as complex as the circumstances of the family business require. The geographical and sectoral scope, as well as the unique characteristics of these businesses, are so diverse that specific plans are required for each one; however, there are certain key principles for achieving a successful succession, and even for turning this process into an opportunity to optimise and improve the organisation’s results. In general, the main steps to be taken for succession are as follows:

1 Assessment:

• Analysis and diagnosis of the ‘Entrepreneur–Family–Business’ triad.

2 Planning:

• Family protocol.
• Succession planning.
• Matrimonial property regime.
• Legal incapacity.

3 Training for generational succession.

• Generational succession.
• Professionalisation of the family business.
• Growth and internationalisation of the family business.

4 Planning and restructuring of business and family assets.

• Analysis, planning and reorganisation of business and family assets with the aim of diversifying risks, defining liabilities, optimising tax arrangements and making the most of tax exemptions and benefits available to family businesses.
• Drafting of the legal documents required to carry out the restructuring of family and business assets.

Throughout this process, interim management services prove extremely useful, as members of the business family see that planning and decisions are taken by a highly qualified professional who is external to the family and will not remain with the business once their work is complete, thereby preventing disputes and tense situations of all kinds. Sometimes, such situations require difficult decisions to be made, which only an expert external to the family dynamics can implement.

Some firms specialising in interim management, such as EPUNTO Interim Management, have found that one of their main drivers of growth, both nationally and internationally, has been the temporary management of succession processes within family businesses. Undoubtedly, the involvement of the younger generations, together with the invaluable work of associations such as the ‘Institute of the Family Business’, has contributed significantly to the introduction of interim management in these types of situations, which are as complex as they are interesting and fruitful if handled properly.