Family business heirs seek a course focused on the succession process

Succession is a common “pain” in family businesses. Realizing that this process of changing command between generations was a topic that kept some families awake at night, the investment bank citi launched a course focused on the preparation of heirs, which reached its fifth edition last week.

The training began to be given after a question from a client who was going through a succession process and asked for training aimed at this challenge. Since then, the course has trained 130 heirs.

The contents are developed with Cambridge Family Enterprise Group, an institution specializing in succession. Citi, on the other hand, submits matters related to financial matters, such as capital market and treasury.

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The need for broader training for successors, according to Helena Rocha, a partner at PwC consulting and auditing, intensified during the pandemic of Covid-19amid the challenges faced by companies.

And the need, she points out, is for specific content, not formal education, something that this young audience already has. “Among these young people (heirs), 84% already have university degrees and 32%, an MBA or doctorate, but now companies need new perspectives, with greater emphasis on people and purposes, and not just on business growth”, he says. Helen.

The specialist says that, although big businesses are looking to the future, there is still a communication barrier between different generations. “The succession plan is one of the most important events and a unique moment in the life of a family business”, says the specialist.

The challenges of family businesses are great all over the world, highlights the person responsible for the Practice of Boards and Succession of CEOs at Egon Zehnder in Brazil, Luis Giolo, who has been helping family businesses in this process.

“Unlike corporations, which are primarily focused on increasing shareholder value, family businesses typically act on behalf of stakeholders with multiple and potentially conflicting interests,” he says.

Therefore, a strong structure of governance it is the strategy to ensure that the company is not harmed or even ceases to exist in the midst of personal conflicts.

“The best companies have put in place a robust succession process, with clear governance rules, often prohibiting other family members from occupying positions in the company, in order to end the family leadership cycle in the future”, emphasizes Giolo.

The course has already trained three CEOs

Among potential new family business leaders who have taken the course taught by Citi since 2017, the average age is 25 to 30 years old – the youngest being 19 years old. About 80% of the students already work in the businesses that they may manage, while three students have already been promoted to the position of CEO.

During this year, one of the participants was Julia Cavalca Knack, 26, one of the heirs of the Cavalca Group, founded by her grandfather over 70 years ago. The holding company was born as a grain producer, but today it also has a trading export and import) and a construction company. The business is preparing the third generation of the family for a future succession. The family put on the table that everything will be done in a structured way, with the help of a consultancy.

Graduated in Foreign Trade, Julia is already the group’s financial manager. “Among the things we learned was the importance of preparing third, fourth, fifth generation leaders. That would be my grandfather’s dream: to perpetuate the company. And for that, the preparation of shareholders is important,” she says. After the course, she plans to pursue a postgraduate degree in capital markets.

Julia’s classmate in the course, Eloisa Guerra Nogarolli, 24, chose an area of ​​education far from the activity of the family company, the retailer Cia. South American Distribution. She has just graduated in Psychology. After the American bank course, she believes she is better prepared to talk about business with her father and uncles, who run the company. “My parents never pressured me and gave me freedom to make my choices. But at the same time, I understand that there is a responsibility.”

Julia Cavalca Knack, 26, is one of the Grupo Cavalca heirs;  this year, she participated in a course focused on the preparation of heirs at Citi.
Julia Cavalca Knack, 26, is one of the Grupo Cavalca heirs; this year she participated in a course focused on the preparation of heirs at Citi. Photograph: Hélcio Nagamine/Estadão

With an eye on participating in the day to day of the company, Eloisa identified that she needs to take a Mathematics course. She points out that she will have to balance her career as a psychologist with monitoring the business: “If you don’t do that, I’ll always have the flea behind my ear.”

Melhoramentos, a century-old business in the publishing and paper production sector founded in 1890, is starting its fifth generation. The business is part of a very select club: according to PwC, only 5% of family businesses reach the fifth generation.

At Melhoramentos, cousins ​​Paula Weisglog and Marcello Willer have just taken up positions on the board of directors. “The family is only on the boards – of directors, shareholders or the family”, says Paula, who for two decades was linked to the agendas of sustainability of companies, but did not work in Melhoramentos.

Now chosen president of the collegiate, she has placed the agenda at the top of priorities ESG (from environmental, social and governance initiatives). “To perpetuate itself, the company has to change, as well as society”, says Paula, emphasizing that the business has to align itself with the purposes of the new generation of leaders.

The succession plan is one of the most important events and a unique moment in the life of a family business.

Helena Rocha, partner at PwC

• Structured governance

For the process to have a better chance of success, experts point out that the company’s corporate governance structure needs to be structured in such a way as to prevent personal issues from affecting its day-to-day.

• Profiles

Many businesses are hiring consultancies to study the profile of the next generation that will take over the company: some companies choose to seek market executives, leaving the family only on the board, while others try to unite the areas of interest of each heir to a specific department.

• Communication

The different generations need to communicate to define the best strategy for the company and be able to promote the transition, with a successor approved by all.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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