THESE (FORMERLY) WEALTHY FAMILIES OFFER A MASTERCLASS ON HOW NOT TO MANAGE RICHES, IF YOU WANT TO PRESERVE THEM BEYOND THE THIRD GENERATION.
THESE (FORMERLY) WEALTHY FAMILIES OFFER A MASTERCLASS ON HOW NOT TO MANAGE RICHES, IF YOU WANT TO PRESERVE THEM BEYOND THE THIRD GENERATION.
Don’t be too generous with family
Even if that may not make you Mr Popularity. In the 19th century, US railroad royalty the Vanderbilts were among the richest in the world, with a reported net worth of US$200 billion (S$270 billion) in today’s terms. But over successive generations, the fortune was divvied up among family members who were less business-savvy compared to patriarch Cornelius Vanderbilt and his son, William Henry. With various Vanderbilts pursuing their personal interests, ranging from extensive philanthropy to indulging in the trappings of high society, the money dwindled away. Today, the Vanderbilt fortune is but a sad history lesson for moguls in the making.
DON’T LOSE YOUR FOCUS
Stick to a proven moneymaking niche. Don’t be like the Stroh family, who was once synonymous with honestto- goodness US-made beer. A series of missteps in the ’80s and ’90s, including aggressive expansion and investing in businesses outside its expertise, resulted in a painful draining of the family’s coffers. Then-CEO Peter Stroh admitted to Forbes in 1992: “We tried to do too much.” By today’s standards, the family managed to lose an eyewatering US$9 billion in a few short decades.
DON’T PLAY THE FIELD
Accumulating a harem can be detrimental to one’s financial health. Huntington Hartford, heir to US grocery chain A&P, married four times and had innumerable affairs that presumably kept him out of the boardroom. Barbara Woolworth Hutton of retail giant Woolworth splurged on shopping sprees and her seven husbands, including actor Cary Grant and an assortment of European royalty. She inherited US$42 million in 1933, but at the time of her death in 1979, all that was left was a reported US$3,500.
DON’T BE A MEGALOMANIAC
Know when to let go. Consider the widely publicised case of Sumner Redstone, chairman of media company Viacom. The 93-year-old is still fighting to hold the reins on his company, amid litigation over his health and competency. All this drama has led to huge changes on the board, including the ouster of its CEO and a wild see-sawing of its share prices, which will surely have wide-ranging effects on the company in the long run.
DON’T FIGHT WITH FAMILY
Or at the very least, keep squabbles as private as possible. A cautionary tale of how infighting and power tussles can lead to the loss of a family business can be seen in the 150-year-old Anheuser-Busch company, the maker of Budweiser beer, among some 30 other beer brands. The dynasty was marked by bitter fights as various family members tried to wrest power from one another. These public spats obviously weakened the family’s hold on their business and in 2008, the company succumbed to a hostile takeover by Inbev.
