BBVA Global Wealth and IE University provide strategic orientation to business families in Spain, Switzerland and Latin America
The study helps entrepreneurial families identify the “moments of truth” they will face in managing their companies.
A new report by BBVA Global Wealth and IE University’s IE Center for Families in Business analyzes the nine “moments of truth” business families must be aware of and make decisions to strengthen their strategy. Through this initiative, BBVA will provide advice to business families in Spain, Switzerland, Colombia, Mexico, Peru, and Uruguay.
Over the past two years, BBVA has worked with the IE Foundation’s IE Center for Family in Business (IE University) on different initiatives to reinforce and enrich its Business Families Program. This Business Family Program was launched in 2021 and this service has been extended to private banking clients in Switzerland, Colombia, Mexico, Peru, and Uruguay.
The study, developed by Carlos Mas Ivars and Tecla Keller, collaborators at the IE Center for Families in Business, includes exhaustive fieldwork with business families and confirms that the strategic potential of a family businesses lie in the values, the entrepreneurial culture and the purpose of the owner family. Success, say the authors, lies in ensuring value creation over generations as a business family.
The study helps entrepreneurial families identify the “moments of truth” they will face in managing their companies, when they will have to think about, discuss and make critical decisions. This includes keeping the business family together (or not) in order to preserve a legacy (or not) or shared goals. The authors have identified nine “moments of truth” in financial decision-making in their analysis:
- Preparing for/responding to change and increasing complexity in the family structure.
- Planning for a successful generational handover and preparing for the next generation.
- Evolution of the governance and management model required by the business and by changes in the role of the family.
- Need to acquire new capabilities to grow, compete successfully in the core business or diversify.
- Need for a decisive financial contribution to respond to a crisis, to enable a leap in growth and transformation or to restructure the shareholding.
- Preparation of a takeover bid or a planned sale by the family.
- Management of surpluses and liquidity events for asset diversification.
- Development of the family’s values and legacy also as a responsible investor or philanthropist.
- Risk and crisis management in the business, family and wealth and its implications for the survival of the business family and its legacy.
“These moments of truth test the harmony and cohesion of the family around its willingness to operate together, with what scope, with what rules and with what priorities.”
Carlos Mas Ivars and Tecla Keller
“They lead the family to have to reach consensus on their their purpose and a vision, and if they did have them, possibly, to have to reconsider them. They must understand the why, the how, the what and the who, as well as the when, and to give the best answer, the best of the entrepreneurial family,” they add.
Carlos Mas and Tecla Keller say there are two challenges that fundamentally differentiate family businesses from other types of enterprise: the need to manage the complexity and uniqueness of the family, business and transmissible environment, and the ability to translate the long-term vision of the business family into competitive plans and capabilities that make it a reality. “When a business family successfully manages these two major challenges, it is very likely to become a ‘responsible shareholder’, which combines the maximization of its financial wealth with the preservation of its socioemotional wealth, making it a strength and an asset both for the competitiveness of the company and the sustainability and profitability of the estate and for the protection of the family legacy,” the authors conclude.
Photo: freepik.com.