Latin America
The family business sector in Latin America remains resilient,
despite the difficulties some of the economies are going through
at the moment. The winning businesses featured this year
in the yearbook – Itaú Unibanco (Brazil), Danper (Peru) and
Sempertex (Colombia) – are great examples of this resilience
and determination to succeed. Indeed, family businesses often
perform better than non-family businesses when economic times
are tough and, in many cases, this is happening in Latin America.
Many are burdened with less debt and can draw on their cash
reserves during economic downturns. Also, their emphasis on
the long term means they will not become overly concerned
about economic problems, because they can look beyond these
and see a brighter future.
André Viola Ferreira
Latin America
Family Business Leader
“Succession is a big
issue for many
Latin American
family businesses.”
| EY Family Business Yearbook 2016
But family businesses across the region have also become
more reflective, focusing on internal issues, particularly their
governance. This year’s winners in Latin America all place
governance at the heart of what they do and they will continue
to do so. They all have a coherent strategy to bring the next
generation into the business. The governance is strengthened by
regulatory compliance environment and keeps the family values
as a reference, making them fast-paced businesses that focus
on long-term strategies. But, in most cases, family charters and
constitutions are rare among local family businesses. This still
needs to change.
Succession is a big issue for many Latin American family
businesses. Many of them were set up in the last 50 years and
some are beginning to transition to the next generation. The
role of bringing in non-family managers into C-level also needs
to be addressed. It’s not just about survival for family businesses
during the current downturn – they are making internal
adjustments to their structure with an eye on longevity. A good
challenge is to keep the entrepreneur spirit alive, inspiring
the new family members to develop new businesses, even on
the core business or creating new divisions and investments.
Education is the key to leverage this path.
Even if 72.2% of Latin America's largest family business are
listed, many family businesses in the region intend to stay
private. And the downturn has, if anything, reinforced their
emphasis on non-listed entities. Their ownership structures
allow them to focus on the long term, which means that family
businesses in the region are more likely to be concerned with
sustainable growth. Many of them continue to create joint
ventures with foreign partners, usually with other family
businesses. This trend will be affected by the economic situation
in each country, given the characteristics of each sector in the
specific commodities cycle.
Family businesses in the region will inevitably have to deal with
new regulatory pressures, such as inheritance tax requirements
that can be onerous.
Nevertheless, Latin American family businesses are meeting all
the challenges related to economy, governance and succession.
I am confident that they will succeed in these challenges, and
create a lasting legacy for the whole business, community and
next generation.
André Viola Ferreira
[email protected]
EY Family Business Yearbook 2016 | 127