In Portugal, more than 70% of businesses are family-owned, and many face the challenge of generational transition without adequate preparation. Planning the succession well in advance is essential to preserving the company's value and safeguarding its continuity.
When to Start Planning
Ideally, the succession process should begin 5 to 10 years before the actual handover. This horizon allows for gradual preparation, minimising risk and maximising the likelihood of success.
The Stages of Succession
1. Business Valuation
Establishing the company's true worth is the starting point. A professional valuation weighs tangible and intangible assets, the capacity to generate future cash flow, and the company's competitive position in the market.
2. Identifying Successors
The choice of successor — whether from within the family or outside it — should rest on competence and commitment, not on family ties alone. Training and mentoring the successor are critical stages in their own right.
3. Corporate Restructuring
The company's legal structure may need adjusting to facilitate the transfer of shareholdings and to optimise the tax burden of the transaction.
Business succession is not an event — it is a process. And like any process, it calls for planning, method and professional guidance.
Tax Optimisation
There are legal mechanisms that can significantly reduce the tax burden of transferring shareholdings, including exemptions from IMT (Portugal's property transfer tax) and reliefs under IRS and IRC (Portuguese personal and corporate income tax, respectively).
Managing the Emotional Dimension
The emotional side of succession is frequently underestimated. Family conflict, resistance to change and the sheer difficulty of letting go are real challenges that must be handled with sensitivity and professionalism.
At Ravina Promissora, we support family businesses throughout the entire succession process, from the initial valuation through to the consolidation of the new leadership.