Ensuring succession in family businesses can be an easy task for those who see work in companies from abroad. But the reality in Brazil is slightly different, since only 24% of companies with patriarchal roots were able to prepare successors for them. The data was released in the 10th Global Survey on Family Businesses, referring to 2021.
In the country, according to the Brazilian Institute of Geography and Statistics (IBGE), 90% of Brazilian companies have a family profile. Organizations with these characteristics also account for 65% of GDP, in addition to employing 75% of Brazilian workers.
Attorney specializing in corporate law and strategic corporate and business management, Marco César Favarin, explains that family succession must take into account governance issues for business continuity.
“Implementing proper succession planning allows not only to save on taxes, but also to organize the complete transfer of assets to successors and heirs in a simple and unbureaucratic manner,” sums up the lawyer who is a partner at Consulcamp.
This concern is significant among family-owned agribusiness, a sector responsible for 27.4% of Brazilian GDP in 2021. Agribusiness Research Governance: Perceptions, Structures, and Environmental, Social, and Governance Aspects in Brazilian Rural Firms, by KPMG in Brazil and the Institute Brazilian Corporate Governance (IBGC) showed that for 54% of respondents, succession is the company’s greatest need.
In the case of Antônio de Pádua, a company in southern Minas Gerais dedicated to the production of specialty coffee, work began in the 1970s. Guilherme Rocha currently runs production with his father and uncle, but he says the company, started by a great-grandfather, was died by grandfather and other family members. The longevity of the work, according to Rocha, is justified by “the love of the earth”,
“At the time when my grandfather also started working with pigs and cows and my grandfather narrowed it down to specialize only in coffee and my father continued to improve crops with various studies,” he wonders. Rocha, who has a degree in civil engineering, gave up business to devote herself exclusively to the family activity.
He combined experience gained from childhood watching the work of family members with courses on roasting beans and tasting and grading coffee. He is currently studying a postgraduate course specializing in coffee cultivation. “This knowledge helps improve our production, achieve more productivity in the fields and quality in the grains,” he analyzes.
Currently, coffee produced in Paraguas is marketed with stores in the region, but is shipped all over Brazil in online sales.
How do you plan to succeed?
Attorney Marco Cesar Favarin points out that the succession within the family circle must be planned in advance. Anticipation can make the process cheaper and faster and leave little room for legal appeals. “The loss of the head of the family or mother is, in and of itself, a delicate moment. He explains that putting in place a succession plan ensures that the transition is smooth, without bureaucracy and even cheaper, as it is possible to save a lot of taxes.”
By designing succession to life, entrepreneurs avoid judicial inventory and court fights that can last for years. “You avoid, for example, blocking assets until effective participation occurs. These prolonged disagreements can hinder investments and even paralyze these companies. When everything in life is planned, it is possible to define specific clauses for each situation. That is why it is important to seek out specialists. They understand every sector, to determine the right solution for every need,” he adds.
Favarin also points out that there is no single formula for succession planning. “Every business, every family has a structure, a need. Solutions change if there are minors, people with disabilities, and children out of wedlock. So it is necessary to study every family structure, business and hereditary structure, and of course satisfy the wishes of the patriarch. The goal is to improve both Bureaucratic issues and succession,” the specialist continues.
Albatross Transport, the company that started its course in Belo Horizonte, is another example of a planned succession within the family. The current CEO, Marcelo Patros, has worked in the company since the beginning of its activities, and is still at gas stations, in 1973. He worked as a gas station official and worked in all sectors of the carrier established by his father, Marom Patros.
The company currently operates in more than 85 cities in Brazil. “We are a family business, but we have professional management and corporate governance. We value the closeness of the entire team and the managers’ availability for dialogue, collaborative work and personal relationships,” OTempo said.
He claims his father prepared him and his two brothers for the succession, but the company is now paving a new path, with professional ties outside the family. “We are going through the succession process again, and we are thinking of continuing our business. We have decided on professional management, bringing in professionals with extensive experience in the market and implementing a board to support this process,” he revealed.
For Marcelo Patros, the main difficulty that she faced in maintaining control of the company in the family was the interest of future generations in controlling the company. “It is not enough to be a manager, it is necessary to know the business deeply, to love what you do and, above all, to love the work. He concluded that other generations do not always align with the type of business the company has, showing an interest in other professional activities.”