Family offices and succession pacts, the new family capitalism

Family capitalism has not changed over the years. I think the changes have been marginal'. Business banker Gerardo Braggiotti, speaking at the Trento Festival of Economics organised by the Il Sole 24 Ore Group, sets a firm point: 'The ingredients that determined success twenty years ago are essentially the same. Which ones? To explain this, Braggiotti recalled the Fiat affair when, due to the approach of a converting loan in 2005, the Agnelli family risked being ousted from the company. On that occasion, the banker continued, 'having a capable management regardless of whether it belongs to the owner family, flanked by trusted advisors and the presence of a family member open to change, were the winning ingredients'.

A 'rule' that still applies today. And this despite the fact that businesses have become increasingly sophisticated, modern and complex to manage, as well as recording important cultural differences between the European and American family business systems, observed Santiago Iñiguez de Onzoño, president of IE University, one of the most prestigious business schools in the Old Continent: "There are substantial differences between European and American family businesses", observed the IE president, "the American system is based on meritocracy, pragmatism, with a focus on performance and greater separation of ownership from control. The aristocratic model, the European one, is more traditional, more tied to the past, and a lot of emphasis is placed on family identity'.

Compared to the past, however, there are essentially two major novelties. The first, Braggiotti noted, concerns "the emergence of family offices that are often professionally structured and organised and are becoming a strategic decision-making centre for what concerns the family. These are structures that in Europe and the US are taking on a very important role. They are sophisticated investors'. The second, which probably coincides with the most important challenge facing this type of business, "concerns the awareness of the need to prepare for the generational transition in time," observed Fabio Corsico, professor at Luiss in Rome in family capitalism. "Things are changing and especially in the last five years there has been a greater awareness of how necessary it is to prepare these plans well in advance'. There are various succession models, from the passing of the baton to a single heir, as chosen by Gianni Agnelli, to the choice of a single family branch, as decided by Silvio Berlusconi, to entrepreneurs, such as Leonardo Del Vecchio, who entrusted a trusted manager with the management of the empire. All successful choices, stressed Braggiotti, according to whom, in this delicate phase, few but clear rules are needed. But above all, 'we need to prepare the new generations,' observed Ian Gallienne, a third-generation member of the Gallienne Frere family, which together with the Canadian Desmarais family controls Gbl group, a Belgian holding company with a market capitalisation of almost 10 billion. "Gbl is a very interesting case, it has been listed for 75 years, and is composed of two families that decided to join forces. We are in the third generation and ours is a special case,' said the Gbl chairman. Three, according to Gallienne, have helped his family in managing this phase: 'Define the plans when everything is going well. It is also important to prepare the next generation: I have five children who have to understand that they are not entitled to anything, but neither are they forced to choose the path of the family business. We, for example, have set up a family office precisely to make them aware of the reality of the company. The last point I would raise is not to pay generous dividends'.