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Advisory 13 Jul 2022

BBVA Global Wealth and IE University are providing strategic advice to families in business in Spain, Switzerland and Latin America

BBVA Global Wealth and the IE Center for Families in Business of IE University conducted a study that analyzed nine “moments of truth” in which business families should reflect and make decisions to reinforce their strategy. Through this report, BBVA will promote the advice that business families receive in Spain, Colombia, Mexico, Peru, Switzerland and Uruguay.

BBVA Global Wealth y el IE Center for Families in Business impulsan el asesoramiento de las familias empresarias en América Latina y Suiza

Over the last two years, BBVA has collaborated with IE University's IE Center for Family in Business on different initiatives that reinforce and enrich its Business Families Program, through which it strengthens advice to this type of client. This Business Family Program was launched in Spain in 2021 and is now being extended to private banking clients in Colombia, Mexico, Peru, Switzerland and Uruguay.

Developed by collaborators of the IE Center for Families in Business, Carlos Mas Ivars and Tecla Keller, it includes comprehensive field work with business families. The study confirms that the strategic potential of a family business lies in the values, entrepreneurial culture and the purpose of the family that owns the business. Success lies in ensuring the creation of value throughout the generations as a business family, the authors say.

The study helps families in business to identify the “moments of truth” they must face in managing their companies - moments when they will have to reflect, debate and make critical decisions. This includes keeping the family in business united (or not) to preserve a legacy or shared goals. The authors have identified in their analysis nine “moments of truth” regarding financial decision-making:

  1. Preparation for/ response to changes and the growing complexity of the family structure.
  2. Planning for a successful generational take-over and preparation of the next generation.
  3. Evolution of the governance and management model required by the business and the changes in the family’s role.
  4. The need to acquire new capabilities to grow, successfully compete in the main business or diversify.
  5. The need for a vital financial contribution to respond to a crisis, enable a leap forward and transform or restructure the shareholders.
  6. Preparation of an offer to buy or sell that has been planned by the family.
  7. Surplus and liquidity management for estate diversification.
  8. Development of the family values and legacy as a responsible investor and philanthropist.
  9. Risk and crisis management in the company, family and estate and their implications for the family in business and their legacy.

“These moments of truth put the harmony and cohesion of the family to the test regarding their desire to work together, to what extent, with what rules and with what priorities,” explain the authors of the study. “They lead the family to have to make and agree upon an explicit purpose and vision, and if they did have them, to possibly have to reconsider them. They require understanding the why’s, how’s, what’s and who’s, as well as the when’s, and giving the best response, the best of the family in business,” they add.

Carlos Mas and Tecla Keller confirm that they are two challenges that make family businesses fundamentally different from other companies: the need to manage the complexity and singularity of the family, business and estate areas, and the ability to transfer the long-term vision of the family in business to plans and competitive skills that make it a reality. “When a family in business successfully manages these two major challenges, it is highly likely that they will become a responsible shareholder- This combines maximizing their financial wealth with preserving their socio-emotional wealth, turning it into a strength and an asset for both the competitiveness of the company and the sustainability and profitability of the estate, and for the protection of the family legacy,” the authors indicate.