Generational change is one of the most complex challenges for Italian SMEs. According to the AUB Observatory, more than 65% of Italian businesses are family-owned, and many of them will face a generational transition in the coming years. However, less than 30% of family businesses successfully pass to the third generation.

When managed correctly, generational transition can become a growth driver, turning a critical moment into an opportunity to innovate, internationalize, and strengthen the company’s competitiveness.

Why do many successions fail?

The difficulties associated with generational change arise from a combination of factors:

• Lack of planning: many SMEs face generational change in an emergency mode, without a clear strategic plan.
• Internal resistance: the founder often struggles to delegate, while the new generation may face challenges in consolidating their role.
• Inadequate skills: the new management must be prepared to lead the company in an increasingly competitive market.
• Family conflicts: in family-run businesses, internal dynamics can influence decision-making, slowing down the transition process.

According to a study by the AUB Observatory, only 9% of Italian family businesses prepare a succession plan, despite 18% being on the verge of transition.

Three strategies to turn generational change into growth

1. Structuring a clear succession plan

A successful generational transition requires planning at least three years before the actual change. This plan should include:

• Identifying future leaders: assessing the successors’ skills and, if necessary, incorporating external management.
• A gradual transition of the founder’s role: a progressive transition ensures stability and strategic continuity.
• Defining clear business objectives: outlining a long-term strategy to secure growth and innovation.

2. Innovating the business model and expanding into new markets

Generational change presents an opportunity to modernize the company and adapt to new market trends. The new generation, often more inclined toward digitalization and internationalization, can introduce crucial innovations:

• Digital transformation: the adoption of new technologies can improve efficiency and productivity.
• Sustainability and ESG: integrating sustainability strategies meets growing market demand and enhances competitive positioning.
• Internationalization: expanding operations abroad through M&A allows access to new markets without having to build a commercial network from scratch.

3. Leveraging M&A operations to strengthen competitiveness

Many SMEs use mergers and acquisitions (M&A) as a tool to facilitate generational transition and ensure business continuity. Some applicable M&A strategies include:

• External growth: acquiring complementary companies can strengthen market leadership and reduce dependence on a single generational transition.
• Entry of strategic investors: opening capital to private equity funds or industrial partners can provide financial and managerial resources to support new leadership.
• Partial or full sale: in some cases, selling the business may be the best solution to ensure continuity and growth, preventing leadership gaps from compromising the company’s future.

Conclusion

Generational change is not just a challenge but an opportunity for Italian SMEs to strengthen and grow. Planning, innovation, and M&A strategies can transform succession into a competitive advantage, allowing businesses to face the future with solid leadership and a clear vision.

For entrepreneurs navigating this transition, the support of experienced consultants can make the difference, ensuring an effective and structured succession process.