More than one quarter of the wealthiest family business dynasties in the world are linked to other dynasties through formal business associations like directorships on each others companies, underlining the power of family wealth in the 21st century.
Family Capital has analysed the board of directors and supervisory boards of 500 of the biggest family businesses in the world in terms of revenues and found that at least one in four had a director on their board that had come from another family business dynasty. The link becomes even stronger when Family Capital looked at the number of non-family directors who had worked in a senior position for another family business before joining the board. Although this is more of an informal relationship, it is fair to assume that these individuals keep links with their former employer, i.e. the family, which are no doubt useful to the new employer and family owners.
Of course, many family businesses have no such formal links, but those that don’t will often have informal connections with other family businesses through their extensive networks. Many of these family dynasties are also linked to other businesses through their family offices. And they often invest together in direct deals.
Although connections between families with great wealth isn’t anything new, links in the 21st century are even greater than in the past, and have become more global. Perhaps one of the best examples of a board with strong international family business links is that of Exor, the investment group controlled by the Agnelli family, which owns Fiat Chrysler Automobiles. On its board are family members from three dynasties: Lee Jae-yong, a member of the Lee family that control South Korea’s biggest company, Samsung; Ruthi Wertheimer, who is a member of one of Israel’s wealthiest families; and Annemiek Fentener van Vlissingen, chairwoman of SHV Holdings and a member of the family that control the huge Dutch trading group. Van Vlissingen also sits on the board of family-controlled Heineken, which underlines the often multiple interconnections between global family dynasties.
John Elkann, the current chairman and CEO of Exor, and a member of the family that control the Turin-based group, also sits on the board of The Economist, which is jointly owned by other family dynasties - the Schroders and a branch of the Rothschilds. Elkann also sits on the board of News Corp, part of Murdoch media empire. Indeed, Elkann could probably be the poster boy of family business connections, given his appointments on his board and his other board positions outside of his own businesses.
Here’s some other notable family dynastic links. Diego Della Valle, the CEO of the Italian luxury shoemaker Tod’s and family owner of the group, sits on the board of LVMH, the world’s biggest luxury group and family business owned by the Arnaults. Albert Frère, the Belgian billionaire and investor, also sits on the board of LVMH. Delphine Arnault, the daughter of Bernard, the main shareholder of LVMH, sits on the board of 21st Century Fox, another part of the Murdoch empire.
Bill Ford, who has often been an advocate of the family business model, sits on the board of Ford Motor Company with Jon Huntsman Jr, the son of Jon Huntsman Sr, the founder of the Huntsman Corporation. Cargill, the family-controlled commodities group, has S. Curtis Johnson III on its board, a member of the family that control S. C. Johnson & Son. Groupe Casino, the huge French retail group, controlled by the Naouri family, has David de Rothschild, chairman of the Rothschild Group, on its board. Apart from Annemiek Fentener van Vlissingen, Heineken also has Pamela Mars-Wright on its board, from the Mars family that control Mars, Inc. Hutchison Whampoa, the Hong Kong-based conglomerate controlled by the Li family, has Michael Kadoorie on its board, who controls another Hong Kong business dynasty.
The family-owned German technology group Heraeus has board representatives from two other huge family dynasties, Dr Simone Bagel-Trah, who is chairwoman of the supervisory board of her family business, Henkel; and Franz Markus Haniel, who is chairman of his family business, Haniel. The Swedish fashion retailer H&M, controlled by the Persson family, has a member on its board from the Sievert family, who are linked to major investments in Sweden for more than 100 years.
Where there isn’t a representative from another family dynastie there is often an ex-senior manager who has worked at a family-controlled group. Tetra Laval, which is controlled by the Rausing family, has Bernd Pischetsrieder, the ex-chairman of the management board of Volkswagen, on its board. Bertelsmann, the big German publishing group controlled by the Mohn family, has Kasper Rorsted, the former chairman of the executive board of Henkel, on its board. These individuals bring their expertise of running family-controlled groups, but also their contacts with other powerful family dynasties, when they join the boards of family businesses.
Boards of family businesses, of course, have many non-family business professionals. Just like the big listed, non-family businesses, these come from a multitude of backgrounds, with bankers, accountants, private equity specialists and the occasional ex-politician being heavily represented.
But at a time when the family-business model is flourishing and appears to be increasingly supported by policy makers, because of their long-term approach to decision-making, these links are expected to get even more significant in the years ahead. And with the broadening of these connections, family businesses, particularly the bigger ones, will become even more powerful and influential in the global economy.