Andorran Family Firms Urged to Focus on Profitability and Merit-Based Succession

Andorran Family Firms Urged to Prioritize Profitability and Merit-Based Succession

Andorran family businesses must prioritize profitability and prepare generational handovers by selecting leaders for their skills rather than family ties, economist Sergio Rodríguez has urged.

Rodríguez, an independent advisor and member of the Family Firm Institute, will address the 27th Andorran Family Business Cycle next Thursday with a talk titled "Good Family Governance: Keys to Success." He argues that while ownership can pass to heirs, authority requires earning through merit. Governance structures like family councils and boards of directors should thus include members chosen for their "value and capability," not lineage alone.

Profitability remains the foundation for long-term survival, he said, requiring clear separation of family and business roles. Complementary bodies such as the family council—tasked with training relatives for directorships or shareholder roles—and the board can enhance performance when properly constituted. An independent external advisor plays a crucial role in ensuring impartial decisions, while executive teams may consist entirely of non-family professionals, with owners retaining ultimate control. Rodríguez warned that many such firms lack a strategic plan, despite its importance for viability, succession, and preserving the business vision.

Meanwhile, Manuel Huerta, CEO of Horizont Family Company, will also speak at the event, defending family firms as "the backbone of European industry." He described them as more resilient than non-family competitors, thanks to long-term vision, deep commitment during crises, and prudent risk management. Family members often build reserves in good times to deploy when needed, he noted, while feeling profound ownership—"we put our faces on it and think of our children and the inheritance from our parents."

Huerta acknowledged that family leaders are typically well-prepared professionals but stressed the benefits of external talent for diversity in boards and management committees. He advocated business diversification for longevity, citing his firm's shift from its founder's bolt-making origins to sectors like environmental services, food, and wind energy. "If my grandfather started a bolt company and I stuck with it, he'd fire me for not being entrepreneurial like him," Huerta said.