The Pitfalls of Intergenerational Wealth & Business Management
Running an intergenerational family-owned company can be very challenging. How do you balance present family and lifestyle goals, with operating a successful and growing company? How do you choose what is best for the family and its individual members, while also considering the future and thinking ahead to the next generation of the business?
While some family business dynasties such as the Mars Candy company and the descendants of William Randolph Hearst continue to thrive, other dynasties have crumbled. Frances Stroh was born an heiress to one of the largest beer companies in America, Stroh Brewery Company. In her new book “Beer Money: A Memoir of Privilege and Loss” she writes about her wealthy family’s downward spiral leading to the loss of their approximately 130 year brewing legacy. Ms. Stroh documents the missteps an intergenerational family-run company can make which could result in its collapse.
In a New York Times article discussing Ms. Stroh’s book, they highlight some of the unique issues that arise in intergenerational wealth and business management. For instance, in the Stroh family they chose successors of business management positions along patriarchal family lines. Instead of including women family members and outside talent, they assumed male heirs would automatically be talented and qualified in running the business.
As the Stroh family multiplied, many of the heirs relied on large annual dividends to support lavish lifestyles. Even when business profits dwindled, the dividends to heirs continued, resulting in company principle being drained.
Struggles within the nuclear family also contributed to the collapse of Stroh Brewery Company. Ms. Stroh recalled her father’s alcoholism and her brother’s drug addiction, coupled with the stress of losing the family business, causing her immediate family to unravel.
To read more about the Stroh’s struggle with intergenerational wealth management see the New York Times article.
Learn more about Frances Stroh’s book here.