Family businesses can become a source of conflict between the different members making it up However, why are there businesses that have been very successful in generational change and others that have not? Discover with BBVA in Switzerland how a family protocol can contribute to success.
Family can be defined as a group of related persons, with personal, property and business ties. For multiple reasons and interests, they often face conflicts when managing their businesses and assets. In some cases, deadlocks or even malpractice may occur, endangering the assets garnered throughout the generations.
Before a family reaches the point of conflict, its members should consider writing down how they will relate to each other now and in the future, in matters as relevant as the organization or succession of assets and companies.
One instrument that can be very interesting is the ‘Family Protocol’ understood as a contract between the members to ensure the good governance of their personal or business assets in the future and the strength of which lies in the will of all parties to respect it.
Some of the agreements reached in the protocol can be incorporated into the business’s articles of association that are adapted to the commercial reality of the place to which it belongs. In this way, the protocol becomes a synonym of peace of mind and a legal guarantee in the relationships between the members, the assets and the company. The action areas that these protocols usually embody are:
Family and assets:
- The family’s governing bodies and how they function.
- Use, management and maintenance of their assets.
- Succession during lifetime or by inheritance of the assets.
- How to structure the wealth: companies, trusts, foundations, among other alternatives.
- The intervention of third parties within members and property relationships.
- Rules for reviewing the protocols.
- To define the vision, mission and future development of the business.
- The professionalization of business management.
- The participation of family members in the governing bodies and management.
- Conditions to open new business lines, expansion and innovation.
- Entry of external investors into the capital of the business and conditions for the sale of the business in certain circumstances.
- Terms, requirements and conditions for a family member to sell his or her stake in the shareholding.
At this point, if you’re wondering whether these protocols might be of interest for your business and asset situation, the answer may well be yes, or at least it would be a good idea for a professional, usually an estate planning solicitor, to take a closer look at your personal and family situation.
BBVA in Switzerland has a team of wealth planning professionals who work with families on a daily basis to ensure that their goals are met successfully over generations.