For decades, many Portuguese companies have grown around their founders.

The entrepreneur created the business, won the first customers, hired the team and navigated different economic cycles. The company and its shareholder evolved side by side.

However, a moment eventually arrives when an unavoidable question emerges: what will happen to the company when the founder is no longer involved in its daily operations?

The question is simple, but the answer rarely is. Business succession involves family, ownership, management, wealth and the future, all at the same time, which explains why so many decisions are postponed.

Succession does not start with choosing the next CEO

Succession is often associated with transferring management to a son or daughter. That may be an excellent solution, but it is not the only one. Before deciding who should manage the company, several questions need to be answered:

  • Does the next generation genuinely want to work in the business?
  • Do they have the right skills and experience?
  • Are there several heirs with different objectives, and should they all be shareholders?
  • Does the founder intend to leave the business completely or remain involved in some capacity?
  • How much of the family's wealth is concentrated in the company?
  • Is there enough capital outside the company to compensate family members who do not wish to participate in the business?

Taken together, the answers to these questions may lead to very different succession structures.

Being a shareholder and being a manager are different roles

One of the most important stages in the evolution of a family business occurs when ownership and management begin to be separated.

A family member can be an excellent shareholder without being the best person to run the company.

Similarly, a professional manager from outside the family may lead the business while preserving family ownership.

Separating these two dimensions significantly expands the range of alternatives:

  • creating a professional management team;
  • retaining family ownership and seats on the board;
  • transferring responsibilities gradually;
  • bringing in an investor;
  • concluding that a sale is the solution that best protects both the future of the company and the shareholders' wealth.

Selling does not necessarily mean abandoning a legacy

This is probably one of the greatest emotional barriers in a succession process.

After decades of building a company, considering a sale can feel like a break with the history created by the founder.

The opposite may be true: a strategic buyer may give the company access to new markets, capital, technology or a management structure that allows it to keep growing.

A financial investor may support a new expansion cycle while retaining part of the team and, in certain structures, the existing shareholders in the capital.

A sale may also separate two objectives that are not always compatible: fully preserving family ownership and securing the resources the company needs for its next stage of development.

There is no universal answer, only the most appropriate solution for each family and each company.

A sale can also be partial

The discussion does not need to be limited to two options, keeping 100% or selling 100%. Intermediate solutions include:

  • selling a majority stake while retaining a minority position;
  • bringing in an investor for a period of growth and selling the remaining interest later;
  • selling only one business unit;
  • providing partial liquidity to shareholders while also injecting capital into the company for further investment.

These structures are particularly relevant when shareholders want to reduce wealth concentration risk without giving up the company's future potential entirely.

For many entrepreneurs, a large proportion of the wealth accumulated over a lifetime is concentrated in a single asset: the company itself.

Diversifying that wealth can also be part of a succession strategy.

The worst time to discuss succession is when there is no longer a choice

Business succession benefits from time. When the process starts early, alternatives remain available.

It is possible to prepare a new generation, strengthen the management team, reorganise the corporate structure, improve reporting, resolve wealth-related matters and prepare the company for the possible entry of investors.

When the decision is driven by a personal, family or financial emergency, those alternatives diminish and value may also decline.

A company that depends entirely on its founder becomes harder to transfer precisely when that founder can no longer ensure continuity.

Preparing for succession largely means making the company independent of the need for one specific person to remain at the centre of every decision.

What if the next generation does not want to continue?

This may be one of the most difficult questions to acknowledge, but it is also one of the most important.

There is no guarantee that an entrepreneur's children will share the founder's interests, skills or professional objectives, nor should they be expected to.

Turning a business question into a family obligation can harm both the family and the company.

When there is no natural successor, professionalising management, finding a partner or preparing a sale can all be responsible decisions.

Recognising this reality early increases the ability to choose.

Plan to preserve the freedom to decide

A sound succession strategy does not necessarily require selling a company or keeping it. It should create the conditions for shareholders to choose among different alternatives when the time comes. That means:

  • reducing dependence on the founders;
  • building a management structure;
  • organising information;
  • clarifying shareholder arrangements;
  • separating business and non-business assets when necessary;
  • understanding what the business may be worth if a sale is considered.

At Fenix Capital Partners, we advise shareholders and companies as they assess these alternatives, including preparation for M&A processes, the entry of investors and financial structuring.

Business succession is not merely a question of finding someone to continue what the founder started. It is a decision about the best way to preserve and develop the value that has been created and, in some cases, selling can be part of that continuity.