Family Business Succession: The Good, The Bad, and The Ugly

I hope everyone had a happy Valentine’s Day. For the last several years, I spent most of my Valentine’s Days speaking to advisors in Midland, Texas. The same was to happen this year, but my speech was rescheduled (from my wife’s perspective, a happy postponement, for as much as I enjoy my connection with the terrific Midland planning community, I admit that being there on Cupid’s day without Laurie is not the most romantic way to celebrate). However, I was in Midland recently for a presentation on a topic I describe as the most neglected (and potentially dramatic) area of estate planning, Business Succession Planning.

What makes succession planning so challenging? There are no easy answers or fill-in-the-blank forms. In my Midland presentation on “Business Succession Planning,” I dive into the many technical and psychological aspects, including buy/sell agreements, life insurance solutions, squeeze & freeze tools, and charitable planning ideas. Click here to read the PowerPoint.

The TV Series “Succession” has certainly made business transition a sexier topic. On top of that fictional account of family power struggle to take over a family enterprise, the media coverage is replete with real-life examples of succession intrigue. Over the coming weeks, I’ll share a number of sensational true stories so we can learn the “do’s and don’ts” from them.

The Blum family has its own example of business transition “don’ts” which I’ve confessed before. I’ve readily admitted that this cobbler at times needs to take better care of my own shoes. This month marks seven years since my brother Irwin’s sudden death at age 65 from pancreatic cancer. Irwin was running our family’s meat-packing supply business, handling every important aspect of the business by himself. He was a business whiz, but his style was to keep most data in his head and fly solo. When he left us suddenly, we had a miracle solution. Our mother Elsie (now 93 and still 100% sharp and a business whiz herself) emerged from retirement to manage the business transition. However, our way is not the safe way, for as I wrote in my March 1, 2022 post, “Not Every Family Has an Elsie.”

The Blum family lesson for business leaders is to train successors and, hard as it is, delegate important tasks to them so they can learn. Let’s observe more real world “do’s and don’ts” from three other recent stories of succession. Here is my version of “The Good, The Bad, and The Ugly.”

The Good: H-E-B grocery is a multiple recipient of the Dunnhumby award as the top U.S. grocery retailer, named for owner Howard E. Butt. In the article, “That Time I Met the Owner of H-E-B, and Drove Through a River,” Christopher de Vinck credits H-E-B’s succession win with the strong culture the Butt family instilled in their Texas grocery chain ( Originally founded by Florence Butt, the business passed from her to son Howard Sr., then to Howard Jr., and now to other Butt family members. Howard Jr. challenged his team with this question: “Is our work a paycheck or a calling?” As a leader, Butt lived by his motto “The High Calling of Our Daily Work” and taught “the difference between a company that only cares about money and a company that cares about the customers.” Butt passed down that “spiritual beauty of the best entrepreneurial practices.” Crediting Butt’s values-based leadership for H-E-B grocery’s business continuity, de Vinck sums up the reason for their success: “What a leader says at the top filters throughout the system.”

The Bad: Three months before French fashion designer Pierre Cardin died at 98 of Covid, he boasted to a reporter: “After my death? I don’t think about it. I didn’t organize anything. NOTHING.” The result: a notorious legal battle among 22 family members claiming to be heirs. Cardin, who never had children, left behind an UNSIGNED will designating one nephew Rodrigo to take over his 99.999% ownership. Unsurprisingly, a Paris court ruled the will invalid. As Dana Thomas quotes in “A Tale of Family Intrigue and Inheritance” (New York Times, Sept. 25, 2023), “He didn’t want to hand over his power. He wanted to keep it until the end.” Worse yet, Pierre Cardin refused to create a legally binding succession plan for his family: “Every time we said, ‘Let’s go to the notary and put it down on paper,’ he canceled at the last minute. He couldn’t imagine someone replacing him.” He saw himself as indispensable, bringing to mind another famous Frenchman Charles de Gaulle who wisely admonished: “Cemeteries are full of indispensable people.” Cardin is in one of those graves now while his family feuds over the mega-mess he left behind, three wanting to continue the legacy and 19 wanting to sell and cash out.

The Ugly: Can it get worse? Consider the drama playing out in real time in the Hermes luxury fashion house. Nicolas Puech, also childless like Cardin, is a fifth-generation billionaire owner who has ignited a bitter succession war within the Hermes dynasty. Observe this real-life story where truth is stranger than fiction. The Hermes descendant is adopting his 51-year-old gardener and designating this “‘handyman’ from a ‘modest Moroccan family’ as his rightful heir” (Mary K. Jacob, “Hermes Heir Awarding 51-Year-Old Gardener $11B Fortune, $5.9M in Properties,” New York Post, Dec. 11, 2023). His actions have triggered “an acrimonious battle within the family…[and] irreparable discord with his kin.” Puech had previously pledged his fortune to the Isocrates Foundation, who “opposes any unilateral cancellation of the inheritance contract.” Was it a “contract” or a revocable pledge? Let’s watch to see how this ugly showdown unfolds.

Perhaps script writers are already busy writing a sequel to “Succession.” There’s certainly plenty of material for it here, and even more to come in my upcoming posts.

Marvin Blum speaking in Midland on Business Succession Planning, the most neglected (and potentially dramatic) area of estate planning.