Italian family agreements and business continuity

Italian family firms comprise 80% of all business enterprises belonging to all economic sectors and their main distintive feature is the founder’s will to transfer ownership and management to the heirs so that family traditions are transmitted together with corporate values. Less than half of all family-owned firms, however, survive into the second generation and less than a fifth are still viable into the third generation. The risk of a failure in generational transitions is linked to many variables often operating jointly, as for example: - lack of a clear succession plan; - lack of agreement among stakeholders; - lack of skills on the part of the chosen successor; - dissension within the family; - infragenerational jealousy; - lack of a clear outline of roles; - a fragmented decision-making power; Thanks to a stronger attention to the generational transition, some of these problems could be pre-emptively recognized so that it would be possibile to identify solutions apt to hold back or solve them. Scholars and insiders have shown concern for the critical succession phase and encouraged legislators to modify the transition system allowing entrepreneurs to make a choice regarding the future of their family business through an agreement which is not only an informal one. Therefore, family agreements arise out of the need to allow the founder to transmit ownership and management to one or more heirs. Such new prerogative presents positive implications both for corporate continuity and the reinforcement of a succession plan.