Guiding family business transitions means navigating complex scenarios

• Rebranding journeys for family business and family office
• Restructuring, recalibrating to engage and align stakeholders
• Mitigating and managing the sales of family businesses

Succession can involve a shift from parents to children, or siblings to their children, or even reverse situations, such as the sudden death of an heir requiring the parents to reassume the responsibilities until a new family plan and strategy are in place.

A more common transition involves the death of a husband, leading to his wife assuming the control to ensure that the family businesses prosper. Suzanna Block, a prominent figure in the Dutch trading company Van Eeghen, exemplifies this narrative. The company was founded in 1662 and was involved in the historic spice routes to British colonies and the Far East. Block saved the company twice and was hailed as one of the world’s first female business tycoons.

She managed the business after the death of her husband, Christiaen van Eeghen, and continued it after her son’s passing. The family dynasty was carried on by her grandson, Jan van Eeghen. Such transitions highlight the valuable lesson of empowering—and marrying—strong women, passed down through the generations. A new spouse entering a business family represents a transition to a fresh era that necessitates strategic planning.

Transitions may include family principals bringing in external, non-family C-suite executives to complement their roles, and plan for further transitions. Entering a new industry or segment, expanding into a new country, region, continent, or alternatively, re-inventing the family business due to external factors like political unrest, requires planning, reckoning, and adaptation to drive such transitions purposefully.

Founded in 1630 by Masatomo Sumitomo, Sumitomo has a rich history that began as a medicine and book shop in Kyoto, Japan. Over the centuries, it evolved into a highly diversified conglomerate with interests in banking, mining, cement, shipbuilding, electronics, chemicals, and more. This growth and diversification resonate with the experiences of many other business families.

Innovation, technology, or digitisation journeys can be transformative, affecting decision-making and reshaping industries, communities, and societies on a global scale, ushering new eras of engineering and scientific discoveries, ranging from small, incremental advances to grandiose breakthroughs.

Family businesses often lead to smaller, but nevertheless groundbreaking inventions. One simple example is the invention of  key-cutting, a significant development in locksmithing and security. This innovation can be attributed to Camillo Bianchi, a member of the Italian Silca family business established in 1770.

Rebranding journeys for family business and family office

Rebranding a family business may arise due to the inclusion of next-generation members, the need for fresh identity, or the change of family surnames.

Berry Brothers & Rudd, Britain‘s oldest wine and spirit merchant holding two royal warrants, has undergone several name changes over the centuries while maintaining its heritage. The story of Berry Brothers, a family of coffee purveyors, dates back to 1698 when it was started by a widow and mother, whose last name was Bourne. She established a grocery in the prestigious neighbourhood opposite St James’s Palace, the official principal residence of the monarch.

Over the centuries, the business changed hands from the Pickerings to the Clarkes, until the arrival of George Berry. In 1810, George Berry’s name was above the shop’s facade, solidifying the association of the Berry name in the business. In 1845, his sons, George Jr and Henry, took over the reins, and to this day, the shop still bears their names. The Rudd family joined the Berry business in the early 20th century, further enriching its heritage.

Setting up a family foundation, a family office, or an investment arm can also lead to complex transition phases, and may at some point require a rebranding as well. Whether individually or collectively, a family may choose to unify branding features across all aspects of their enterprise.

Restructuring, recalibrating to engage and align stakeholders

The transition theme in the family businesses revolves around restructuring and recalibrating opportunities.

The history of the Villeroy and Boch families, a German housewares family business originally founded in 1748, is an example of such transition. François Boch, initially in the iron business, shifted his focus to ceramic tableware. Then, Nicolas Villeroy created a ceramic factory nearby. These two families eventually joined forces, resulting in the formation of the renowned Villeroy & Boch brand.

Mergers within family branches can also lead to the creation of powerful business entities, as illustrated by the Japanese Kikkoman family. Their story begun when a military man passed away at the Osaka castle prompting his widow to flee to Noda, Japan, and establish a small business in 1630. In 1917, eight branches of the Mogi family decided to merge their companies, culminating in the creation of a unified company. The company has since grown into the world’s largest producer of soy sauce products.

Additionally, transitions may involve substantial business acquisitions, takeovers, or partnerships, fusions, as exemplified by the Agnelli family’s journey. This family is behind the investment holding company EXOR that has undergone numerous transitions over the years. After Giovanni Agnelli founded the automobile company, Fabricca Italiana Automobil Torino, or FIAT, in 1899, and acquired the famous football club, Juventus, the family ventured into a series of acquisitions and industrial developments, launching successful cars, naval engines, planes, trains, tractors and lorries .

The Agnelli family expanded their portfolio by acquiring food and cement companies. With the post-war reconstruction, they strategically consolidated their international investments. In 1969, they formed a partnership with race-car entrepreneur, Enzo Ferrari, leading to the creation of the Prancing Horse brand.

During the 1990s, the Agnelli family further expanded their holdings by acquiring renowned names like Chateaux Margaux, Club Méditerranée, and the iconic Rockefeller Centre in New York City. They extended their global reach with investments in Asia. In response to challenges, the family changed leadership and infused the company with new capital, leading to a merger with Chrysler to create Fiat Chrysler Automobiles. EXOR became the sole holding company for all the companies, including PartnerRe, and a substantial stake at The Economist. EXOR also acquired 10% of Institut Mérieux, the privately held global healthcare holding of the Mérieux family.

Transitions in the family business, whether they involve becoming family-owned or going public by listing on the stock exchange, or transitioning into a family office, are critical journeys that require careful planning and facilitation to achieve long-term objectives successfully.

Mitigating and managing the sales of family businesses

It is also a major transition when a founder decides to sell the business or part of it, or a shareholder decides to leave and sell out. These decisions may exert serious pressure on family dynamics, particularly managing transitions when family members are not prepared for such events.

Throughout history, transitions have taken various forms, including family leaders earning aristocratic titles, leading to estate management and further privileges. These shifts demand deliberation and adaptation, planning, balancing the interests of family members, transfer of knowledge, clear and purposeful roles and responsibilities, transparent processes, and charting and aligning future directions.

They provide opportunities to increase the family’s value preservation and creation, including business, cultural and social layers, while ensuring legal, financial, and regulatory-related decisions support these strategic objectives.

Transitions underscore the importance of nurturing family engagement and fostering clear communication to maintain harmony, while enhancing shareholder and stakeholder engagement to achieve stability and longevity for various endeavours.

Zita Nikoletta Verbényi is the founder and legacy aesthete at The Legacy Atelier™, and she also sits on Wealth & Society’s Global Advisory Board.