{"id":1302,"date":"2024-05-22T08:05:07","date_gmt":"2024-05-22T06:05:07","guid":{"rendered":"https:\/\/blog.iese.edu\/family-business\/?p=1302"},"modified":"2024-07-08T12:55:30","modified_gmt":"2024-07-08T10:55:30","slug":"strategic-alliances-in-family-firms-7-financial-recommendations","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/family-business\/2024\/strategic-alliances-in-family-firms-7-financial-recommendations\/","title":{"rendered":"Strategic alliances in family firms: 7 financial recommendations"},"content":{"rendered":"

The Family Business Reflection Forum<\/strong> co-organized by IESE’s Chair of Family-Owned Business and the Instituto de Empresa Familiar continues to give us plenty to talk about.<\/p>\n

In the first of this three-part series<\/a>, Prof. Marta Elvira<\/strong> highlighted the core benefits of strategic alliances as engines for growth, which Prof. \u00c1frica Ari\u00f1o<\/strong> brought to life in the second article <\/a>by sharing some real-world success stories.<\/p>\n

In the last of this series, we\u2019ll shine the spotlight on another key issue when considering a strategic alliance: the financial aspect<\/strong>.<\/p>\n

The FRICTO framework<\/strong><\/span><\/h2>\n

During the event, I had the pleasure of moderating a session with three expert panelists: Jaime Hern\u00e1ndez Soto<\/strong>, founding partner of MCH Private Equity, Jorge Lucaya<\/strong>, founding partner of AZ Capital, and Hugo Serra<\/strong>, CEO of GCO (Grupo Catalana Occidente).<\/p>\n

Preparing the panel discussion brought back memories of my time as a professor of finance <\/strong>and advising MBA students on what to keep in mind when modifying a company\u2019s capital structure<\/strong>. In these cases, we always used the acronym FRICTO as a guide:<\/p>\n

F<\/strong><\/span>lexibility
\nR<\/strong><\/span>isk
\nI<\/strong><\/span>ncome
\nC<\/strong><\/span>ontrol
\nT<\/span>empo
\nO<\/strong><\/span>pportunity<\/h2>\n


\nSeven insights from three distinguished panelists<\/strong><\/span><\/h2>\n

Event attendees were mainly owners of family-controlled firms, so the discussion was more strategic in tone than financial<\/strong>. Even so, I’ve taken the liberty of using the FRICTO framework to underline the panelists’ recommendations.<\/p>\n


\nFLEXIBILITY<\/strong><\/span><\/p>\n

1 \u2013<\/strong> Identify your target companies<\/strong> and be patient<\/strong>. When the time is right, start talking. This dialogue may plant the seeds for a solid partnership, which doesn\u2019t need be limited to the exchange of shares.<\/p>\n

2 \u2013 Never forget the option of disinvesting<\/strong>. Not every partnership will be a success. If things aren\u2019t working out, the sooner we course-correct, the better.<\/p>\n

RISK<\/strong><\/span><\/p>\n

3 \u2013 Strategic direction<\/strong>. Family businesses aspire to leave a positive legacy, so the most critical consideration in this type of acquisition is its impact on long-term strategy. To this end, acquisitions must satisfactorily address the following questions:<\/p>\n