Succession Planning - Family Business

Family Business

Arieu proposed a model in order to classify family firms into four scenarios: political, openness, foreign management and natural succession.

POLITICAL SCENARIO: This is the case of a company linked to a large family, where it is expected that through inheritance, the property was spray quickly, possibly faster than the growth of own business, resulting in a dividend per head lower and lower. Identifying suitable members in the family can incorporate to address and possibly distinguish who may occupy the general direction afterwards. However, the existence of many members in the family can turn into conflicts of power, making it necessary to establish agreements and occasionally reorganize the business in terms of those individuals who, because of the obvious professional and human qualities can be recognized as leaders. In many cases this may mean separate reorganization to create new companies and business units.

OPENESS: When members of the next generation are numerous and among them is not possible to identify a person who possesses the characteristics necessary to assume leadership positions with expertise in family business, we have a scenario that we call Open, since the strategy more suitable for this type of organization is to shift some capital to others who can provide not only management skills but also liquidity for family members. This will succeed in securing the future of the business, creating more value for society and retention of jobs for their employees, not to please the family, getting money and avoid future complications.

FOREIGN MANAGEMENT: This scenario occurs when family members who control the business are not many, and yet, not having any of its members with a natural profile of leadership succession when they choose to appoint a non-family CEO .

NATURAL SUCCESSION: Families seeking to preserve its legacy business are the most favorable conditions in the presence of a stage of natural succession. This is the case of a company controlled by a few families, few heirs who in turn have identified among them a worthy successor, a strong name also is associated with the adequacy enough to drive its growth, the ability to run the organization, understanding market and commitment which means only a part of the family patrimony is also a source of value to society, other shareholders, customers, suppliers and even their own employees (stakeholders).this will help in improved succession planning.

Arieu Family Business Succession Model (Spanish)