Andorran Family Businesses Face Acute Succession Crisis with 70% Lacking Plans

Andorran family businesses continue to face a critical succession crisis, with over 70% lacking formal plans despite more than half expecting leadership changes in the next five years.

Juan Corona, a prominent Spanish expert on family firms and co-author of the report *Radiography of the Andorran Family Business*, describes generational handover as the sector's most pressing challenge. Drawing on data from the study, prepared with Fernando Álvarez of the Open University of Catalonia, he notes that 52.6% of these companies anticipate a shift soon, yet 71% operate without an agreed succession strategy or family protocol. This gap risks rushed decisions that prioritise short-term gains over the long-term outlook typical of family operations, while fostering family tensions that disrupt both harmony and business stability.

Corona points to emotional hurdles as a key barrier, especially for current leaders who struggle to prepare for retirement while feeling capable of continuing. He views recent progress positively: until a few decades ago, succession planning was uncommon, but now 51% of firms rank it as a priority. Time is running short, he warns, urging immediate action to safeguard Andorra's economy, where these enterprises underpin local jobs, supplier chains, public revenues, and social cohesion.

The second generation represents a particular vulnerability, often described as a "strategic void." Comprising 30.95% of Andorran family firms, these businesses feature closer owner relationships but frequently lack formal tools like family protocols—the stage where handovers are most expected yet least prepared. Success here demands institutionalisation to balance territorial roots with professional structures. Predecessors must overcome tendencies toward excessive control, insecurity, or indispensability, embracing a "social power" mindset that delegates for the firm's and family's enduring success. Second-generation leaders, typically university-educated in unrelated fields, bring creativity and a collective family orientation, driving professionalisation, diversification, or new initiatives amid shifting economic demands. They often initiate family councils or enhanced communication to align siblings and build governance.

Challenges escalate in the third generation, with "cousin consortia" introducing clashes in values, training, mutual knowledge, and family size. Though younger heirs show sustained interest, societal changes have eroded values like effort and dedication.

Corona calls on groups such as the Andorran Family Business Association to lead, given universities' limited coverage of these issues. "The continuity of these firms means keeping decisions in the Principat, with all that implies for employment and public finances," he stated.