In November 2017, Metrobank founder and business magnate George S.K. Ty died at age 86. A week later, Jon Ramon Aboitiz, chairman of the 130-year old Aboitiz group and fourth generation leader of one of the most revered family conglomerates in Asia, died at the age of 70.
The following month, the second generation scion Victor Consunji of Semirara Mining and Poweer Corp. and the globally recognized construction giant DMCI Project Developers Inc. also passed away. And just last Saturday, January 19, the country’s wealthiest man, Henry Sy Sr. died peacefully in his sleep. He was 94. Forbes magazine estimates his wealth at $20 billion.
The business community mourns the passing of these industrialists, founders and business giants who in one way or another helped shaped the country’s economy right after World War 2. But from a family governance and succession perspective, how do family members make sense of the vast empire these industrialists left behind? Was there a transition? Are the next generation offspring prepared to assume the mantle of leadership? Did these owners prepare the leadership and wealth transition way in advance or left it to chance? Everybody plans to live, but nobody really prepares for his or her death.
The death of a founder whose fixation was always about growth and expansion can shake the very foundations of the businesses and the institutions whose lives depended on it. We have heard countless stories of an autocratic owner who builds the business, then suddenly dies leaving the family totally unprepared to continue the business. The business gets sold, and the family legacy dies with the founder.
According to psychologist and author Kathy Marshack, “founders are notoriously poor at planning for the future of their businesses. As a result, most family businesses don’t live beyond the first generation. And death is not an easy subject to talk about, nor is retirement. But it is a subject that needs to be addressed by all members. Is the business merely a reflection of the founder? What part do other family member play, shareholders and stakeholders alike? Who will run the business after the founder steps down? When will the founder step down?”
These questions reflect what we envision the founder must do before death comes knocking. He must create a succession plan. While founders are often aware of the importance of crafting a succession plan, they also experience psychological resistance to prepare and manage their eventual exits.