Generational transition of family businesses and Family Agreements

In Italy, 53% of entrepreneurs are over 60 years old and over 90% of businesses are family owned.

The vast majority of businesses do not make it past the third generation.

Therefore, it is essential to plan the succession of the company well in advance, so that it can continue to grow, guided by the new generations.

This process must be tackled by analysing highly complex economic and personal situations, which require the assistance of several professionals in order to guide the entrepreneur in adopting the most appropriate tools available.

In addition to trusts and the use of simple companies, one of the most relevant legal instruments in the field of generational transition is undoubtedly the “family agreement”, which allows the entrepreneur to manage the succession by transferring the company or the shares in the “family company” to one or more clearly identified descendants, without there being any disputes during the succession.

In practical terms, the family agreement allows the owner of an economic activity – managed directly as an individual entrepreneur or through a corporate structure – to give a stable destination to the business in favour of his descendants, preventing any succession disputes that could lead to fragmentation and, consequently, to the crisis of the business.

To assess the feasibility of the family agreement, however, it is necessary to carefully study the conditions of the business, and the possible emergence of generational conflicts.