The Succession Reality in Spain
Spain's economic fabric is overwhelmingly composed of family-owned businesses. According to the Instituto de la Empresa Familiar, over 85% of Spanish companies are family-owned, and they account for approximately 70% of private-sector GDP and 60% of employment. Yet the statistics on succession preparedness paint a concerning picture: fewer than 30% have a formally defined succession plan, and only about 10% successfully transition to the third generation.
For the founding generation now approaching retirement age, the decision of whom to sell to is deeply personal. This isn't a financial transaction in isolation—it's the culmination of a life's work. Understanding this emotional reality is the foundation of every successful search fund acquisition in Spain.
Why Trust Matters More Than Price
In Anglo-Saxon deal environments, the highest bidder typically wins. In Spain, that assumption can be dangerously wrong. Family business owners frequently pass on higher offers in favor of buyers they believe will:
- Preserve the company's culture and values
- Retain key employees, many of whom may be extended family or lifelong associates
- Continue the founder's vision for the business rather than strip and flip
- Treat customers and suppliers with the same personal approach
Search fund entrepreneurs have a structural advantage here: unlike private equity funds with mandated exit timelines, a search fund CEO plans to run the business personally. This permanence is a powerful signal to sellers.
Practical Strategies for Building Trust
1. Invest in the Relationship Before the LOI
The most effective searchers in Spain begin building relationships with potential sellers months—sometimes years—before any formal process begins. This means having exploratory conversations, visiting facilities, sharing meals, and demonstrating genuine curiosity about the business and its history.
Spanish business culture prizes confianza—a deep, personal trust that goes beyond professional rapport. Confianza is earned through consistency, presence, and follow-through over time, not through slide decks and financial projections alone.
2. Demonstrate Operational Commitment
Sellers want to know that the buyer will actually run the business—not delegate it to a management team while pursuing the next deal. Successful searchers communicate their intention to be present, hands-on, and accountable. They articulate a vision for the business's future that respects its past.
3. Navigate the Advisors Carefully
In many Spanish SMEs, the seller's most trusted advisor is their gestor (tax advisor/accountant) or a family lawyer who has served them for decades. These individuals wield enormous influence over the deal process. Building a relationship with them—and respecting their role—is often as important as the relationship with the seller directly.
4. Be Transparent About Your Structure
Sellers are naturally skeptical of acquiring structures they don't understand. The search fund model—with its pool of equity investors—can feel opaque to a first-generation business owner. Successful searchers explain their capital structure in simple terms, introduce their key investors, and make it clear who will be making decisions post-acquisition.
5. Maintain Confidentiality Religiously
In tightly-knit business communities—especially in Spain's regional markets—any leak that a company is "for sale" can be devastating. Employees panic, suppliers tighten terms, and competitors move in. Demonstrating your ability to handle information discreetly is a trust signal that carries more weight than any reference letter.
The Transition Period Is Where Trust Is Tested
Most search fund acquisitions in Spain include a transition period where the selling founder stays on in an advisory capacity, typically for 6 to 18 months. This period is critical. The founder is watching everything: how you treat employees, how you handle your first operational challenge, whether you listen before making changes.
The searchers who navigate this period successfully share a common approach: they listen more than they speak, they move slowly on personnel changes, and they treat the founder's presence as an asset rather than a constraint.
"A seller who trusts you will tell you things in due diligence that no data room will ever reveal. A seller who doesn't trust you will find a way to kill the deal—no matter how attractive your offer is."
Cultural Mistakes to Avoid
- Leading with financial sophistication — Talking about IRR, levered returns, and exit multiples in early meetings signals that you're building a financial model, not a business.
- Rushing exclusivity — Pressing for an LOI too quickly can feel aggressive. In Spain, the timing of a deal often follows the seller's emotional readiness, not the buyer's financial model.
- Underestimating regional identity — Spain is not one market. Business culture in Catalonia is different from Andalusia, which is different from the Basque Country. Understanding regional dynamics signals respect.
- Sending junior team members — The seller wants to know who will be running their business. If the person they're meeting isn't the person who will be sitting in their chair, trust erodes immediately.
The Search Fund Advantage
Search fund entrepreneurs have a genuine structural advantage in the Spanish succession market: they're not funds, they're people. The seller can look across the table and see the person who will be leading their company tomorrow. That human dimension, combined with patient capital and a long-term orientation, is exactly what most Spanish family business owners are looking for—even if they don't yet know the term "search fund."