The keys to successful corporate succession

The original founders of a family-owned company will always have a special aura. But what happens when one of these charismatic entrepreneurs comes back out of retirement? That’s exactly what happened recently at Italian company Benetton, when 82-year-old fashion legend Luciano Benetton announced his intention to return to the operational business. On this occasion, we talked with Board Member Philip Marcovici about the question of succession for family companies.

After retiring from legal practice, including close to 30 years with international law firm Baker & McKenzie, Philip Marcovici continues to advise families, companies and governments on tax compliance and international tax policy.

Philip Marcovici
Philip Marcovici
Member of the Board

Question: Have you heard about similar cases like the return of Luciano Benetton? Isn’t this a sign of extraordinary entrepreneurial passion, given that these companies often are the brainchild and then – over decades – center of vital interests of such entrepreneurs?

Philip Marcovici: The return of Luciano Benetton to the company he established and inspired is both interesting and instructive for those involved in family business and asset succession planning.

In the case of Benetton, the company has been struggling of late, and the return of Luciano Benetton is clearly designed to bring back some of the ideas and inspiration of the founder. I have certainly seen many family businesses where someone in their 80’s is playing a very important role – this is sometimes wonderful, as the individual mentors and inspires the younger generation. This is also sometimes harmful, as the individual stifles the younger generation and does not adequately plan for succession, hanging on to control for as long as possible, harming the business, their family and themselves.

In the case of Luciano Benetton, it seems that he is focused on bringing back to the company his vision and creativity, something that was lacking in the business.

Question: After the family withdrew from operational management of the business, Luciano Benetton announced in 2006 that his son Alessandro would succeed him as company chairman, hinting that he was not suited to a more operational role. But Luciano is still chairman and Alessandro is pursuing a career in finance. From the outside, doesn’t this look very much like they missed the ideal moment to hand over the company?

Philip Marcovici: I don’t know enough about the specifics of the Benetton succession plan to be able to comment, but the topic is an interesting and important one for all families to consider. In the case of Benetton, the family seems to have sought to regain control after a public listing, and in their original approach to succession planning chose to have the family play more of an ownership role than an active management role. Success of this approach to family business succession, to me, requires two key elements. First, it is critical that family members not involved in the family business are very well prepared for their roles as owners – this include education and training on how to be an effective owner and board member, something many business-owning families neglect to undertake.

Second, at an early enough stage, very strong professional management is needed to ensure that the shift from a hands-on family member, such as Luciano Benetton, is smooth. In the case of a business requiring the creativity that a fashion company requires, having professional management, including a creative director, up to the task is key. And the training of the family as “owners” needs to include the ability to see when it is necessary to replace members of the professional management team.

Chess board

Question: So, what is the ideal moment to pass a company on to the next generation? What would be your advice for family companies?

Philip Marcovici: My advice would be that families  learn from what other families have done, both successfully and less successfully, in their  succession planning. But the reality is that every family and every family business is different. The process of succession planning is not easy, but it is critical not only to the success of the family business, but to ensuring that the family does not suffer the many problems a badly planned succession approach results in, which can, in too many cases, be destructive of not only the family business, but of family relationships.

Good business succession planning starts NOW and is an ongoing process. It is never too early to begin to plan, and the succession plan should be under constant review, and covering all the relevant “what-ifs?”. What if the founder in control dies or is disabled prematurely? What if the chosen successor decides to go into their own business? How can the business be sold? What if the younger generation do not get along? There are almost unlimited questions that families should be constantly asking themselves.

United Colors of Benetton shirt label

Questions: A final question: Wouldn’t it be helpful to accept that such a complex process always results in disputes or is it possible to plan, or at least help ensure, a harmonious succession? If so, how?

Philip Marcovici: In my book, The Destructive Power of Family Wealth (published in 2016 by John Wiley & Sons), I outline some suggestions for families working on business (and more passive asset) succession. These include:

  • Focusing on the need for the younger generation to be well prepared for their future roles, and here both as potential managers and as potential owners of the family business
  • Considering the importance of good governance strategies needed once control moves away from the founder. Trusts, partnerships, foundations, shareholders’ agreements and other documentation has to be well understood and carefully crafted and agreed
  • Dealing with the reality that many founders of businesses will live healthy and long lives – it is not always a positive, however, that the founder is in control well into their 90’s as this may not result in the younger generation stepping up. I have seen wonderful business succession approaches were the older generation gives up control in their 60’s, mentoring the younger generation, and remaining ready to step in and help, in a positive way, while maintaining the distance needed to let the younger generation learn how to take charge and to help professional managers feel confident in the future of the business
  • Family constitutions can be an important element to good succession planning, and the process of developing a family constitution or charter, through family retreats and otherwise, can be a key step. Included in such constitutions can be reference to areas such as
    • background on the family and family business
    • mission and vision
    • family and business governance, including dispute resolution
    • defining who are “family” and the extent to which this includes in-laws and others
    • setting out who is meant to own family assets, including business assets
    • family values
    • family education requirements
    • employment policies
    • expenses and use of family assets
    • social responsibility
    • how to support entrepreneurs in the younger generation in a fair way
    • compensating family members involved in the family business
    • putting in place mentors for family members
    • expectations on pre-nuptial and other arrangements designed to protect the family business and family assets
    • approaches to “pruning the family tree” – a means of buying out family members who do not support the business, and allowing their children to buy back in
    • approaches to “harvesting” the family business – selling at the right time and reinvesting in new businesses. The family business, if it is to survive, cannot always stick to its original business, which may no longer be attractive. Times change, and businesses need to change

I am very confident that with good planning, successful business succession can be achieved, and in a harmonious way. The younger generation should best be involved in the process, and there are many families whose success in the process can be examples to consider.

Tilmann Schaal Tilmann Schaal has worked in digital communications for more than 15 years and has been in charge of Perspectives until May 2019 as well as The Classic Car Trust’s news blog from 2012 to 2018.


Living in a complex world or in a world full of opportunities? The answer depends on the standpoint. With our blog Perspectives and our Insights series, we present the topic of wealth from intriguing perspectives.

Subscribe to our newsletter to learn more.

!Please fill out this field
!Please fill out this field
!Please fill out this field
!Please fill out this field
!Please fill out this field
!Please fill out this field
!Please fill out this field
We will only use your email for delivering the newsletter in respect of "Perspectives". Newsletter delivery is dependent on current interest.