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Family Wealth Destruction (Thread)
Note this is not my direct family but they are distant cousins – Omitting names for privacy reasons
The Rise (1)
Note this is not my direct family but they are distant cousins – Omitting names for privacy reasons
The Rise (1)
Immigrant founded family business started in the mid 1800s and developed a ‘better mouse trap’ in their industry (manufacturing).
Their product reduced man hours by 5x and became the preferred product / market leader (2)
Their product reduced man hours by 5x and became the preferred product / market leader (2)
Turn of the century, with the founding of Ford Motor Co, they saw their product was to become automated
They decided to go public and bought/merged w their automated rivals and maintained their 800 lb Gorilla status. A truly visionary transition
(3)
They decided to go public and bought/merged w their automated rivals and maintained their 800 lb Gorilla status. A truly visionary transition
(3)
Mid 20th century, family shares were diluted w non family member investors looking for a sum of the parts sale process
Between the private ownership, public offering and final sale, the family was one of the wealthiest in the US (4)
Between the private ownership, public offering and final sale, the family was one of the wealthiest in the US (4)
The Fall
They set up a family office post IPO and pre breakup. They hired a few individuals to run the FO with the patriarch leading the investment committee – did very well for themselves. There were three main family members in that Generation (5)
They set up a family office post IPO and pre breakup. They hired a few individuals to run the FO with the patriarch leading the investment committee – did very well for themselves. There were three main family members in that Generation (5)
One passed away with no heirs
Another was completely oblivious to finances. She sat knitting while they discussed their families’ fortunes
The third (The Patriarch) then passed away – and the lynchpin was now gone (6)
Another was completely oblivious to finances. She sat knitting while they discussed their families’ fortunes
The third (The Patriarch) then passed away – and the lynchpin was now gone (6)
The next generation knew they were wealthy but had no knowledge of where their money was being invested
The family wasn’t buying yachts/mansions/cars – They lived an expensive lifestyle but not anywhere outside of their means (7)
The family wasn’t buying yachts/mansions/cars – They lived an expensive lifestyle but not anywhere outside of their means (7)
The FO had no formal governance – No family oversight for their strategy
They had annual meetings and didn’t include investment status and performance reviews.
These guys were buying crazy alt positions (8)
They had annual meetings and didn’t include investment status and performance reviews.
These guys were buying crazy alt positions (8)
Casinos, sports teams and other non traditional assets
Crazy stuff
Through investment losses and not keeping up w the market, the family lost both literally and from an opportunity cost perspective, a fortune (9)
Crazy stuff
Through investment losses and not keeping up w the market, the family lost both literally and from an opportunity cost perspective, a fortune (9)
I suspect if they invested in a 60/40 balanced portfolio for 60 years, you may know the name of their family if I told it to you
They remain wealthy don’t get me wrong. The next generation still lives very comfortably, but without the extra zero added to the net worth (10)
They remain wealthy don’t get me wrong. The next generation still lives very comfortably, but without the extra zero added to the net worth (10)
Everyone is utterly focused on building wealth. It takes a different skillset to keep it
Related Book Recommendation: Fortune’s Children – About The Vanderbilt’s is another scary tale
(11/11)
Related Book Recommendation: Fortune’s Children – About The Vanderbilt’s is another scary tale
(11/11)
