Summary List Placement
“Passing money on is the simplest thing to do in the world: All you have to do is die,” New York real-estate developer Kent Swig told Insider. “The hard part is passing money on from one generation to the next and having the company succeed.”
Swig, 60, is the grandson of the real-estate scion Benjamin Swig, who started building his property empire in 1936. After his father, Melvin, died in 1995, Swig, his three siblings, and cousins, who grew up together in San Francisco, ran the board of the Swig Company. Ten years ago, Swig realized that the setup was sustainable as the next generation, spanning from 18 to 48 years old, grew larger.
“You can put eight people around a conference table and have pretty good discussions,” he said. “To put a group of 30 people who don’t have that sibling connection, who live in different places and are at different places in life, that is much more difficult.”
Only 12% of family businesses make it into the hands of the third generation; it drops to 3% for the fourth generation. Swig realized the best way to ensure the eight-decade-old company’s future was to let the next generation have a say in company matters and formalize how decisions were made. He overhauled the family office, which he called a “mom and pop operation,” into a modern corporation more appropriate for an investment firm with more than $3 billion in commercial real estate, per Swig. There were growing pains, but he believes they were worth it in order to help the next generation thrive even after he and his peers pass away.
“It’s tough to give up a bit of control to somebody else while you’re alive,” Swig said. “But I’m trying to convince my generation to do something while we’re around and watch our kids prosper, watch them stumble. While we’re still here, we can have real-time conversations about what to do and what not to do.”
The company’s board now comprises five family members (a mix of third- and fourth-generation heirs), four independent directors, as well as the company’s president, and CEO. There are committees that oversee everything from budgeting to documenting the family’s history. Swig serves on the investment and governance committees but refused to be chairman of the board so a younger cousin could take the reins. These changes go against the ethos of Swig’s late father, who only shared information about the family fortune on a “need to know basis,” Swig said, but they were necessary for the company’s longevity.
“Businesses are created by this cult of personality, a very sharp, brilliant person,” Swig said. “The idea is to take something that was created by this cult personality and extend it through generations. That takes corporate governance. You can’t take what was originally created in 1936 and expect it to work today.”
For the past 60 years, the most conventional way to bring younger family members into the fold was through philanthropy, Swig’s chief of staff Wendy Craft told …read more
Source:: Businessinsider – Finance
Marvel Studios & Disney+ | SUPER BOWL 2021 | Promo