Generational transition for a third-generation manufacturing family business

The Challenge

A third-generation Spanish manufacturing company — a family-owned precision components manufacturer founded in the 1970s — had reached €45 million in revenue, but faced a governance crisis threatening its long-term viability.

The two family branches — descendants of the original founder and his brother — held incompatible strategic visions on internationalisation, dividend policy, and which family members should hold management positions. The absence of a family protocol or a board of directors with clear rules had turned every significant decision into a potential conflict. The CEO, himself a family member, lacked a clear mandate and sufficient institutional backing to execute the strategy.

The second generation, approaching retirement age, wanted to secure the business’s continuity before stepping aside, but the succession process had never been formalised.

Our Approach

The project was structured in four phases. The first consisted of a deep diagnostic: individual interviews with all shareholders from both family branches, analysis of the existing shareholders’ agreement (dating from 1998 and not contemplating third-generation scenarios), and a financial and strategic review of the company.

In the second phase, we facilitated a family mediation process with all parties involved. The objective was not to impose solutions but to build consensus on the principles that should govern the business going forward. We agreed on a family protocol regulating access of family members to management positions, dividend policy, exit mechanisms for shareholders wishing to liquidate their stake, and the decision-making process for strategic matters.

The third phase was the implementation of the new governance model: constituting a Board of Directors with three senior independent members with backgrounds in manufacturing, finance, and international strategy, and redesigning the management structure with clearly defined responsibilities.

The fourth phase covered the next-generation development programme: leadership training, executive mentoring, and a twelve-month plan for progressive incorporation into management responsibilities.

Results

The generational transition was completed in eighteen months without operational disruptions or loss of key clients. The three independent directors brought an external perspective that professionalised decision-making and facilitated approval of a European expansion plan that had been blocked by the family conflict.

During the process, the company grew revenue by 12%, demonstrating that institutional stability has a direct impact on commercial performance. The new family protocol was signed by all shareholders without exception, and the second generation was able to retire with confidence that their legacy was in capable hands with clear rules for the future.