The Zuckerberg Effect On Family Firms
4th December 2015 David Bain, Family Capital
Mark Zuckerberg announcing plans to give away shares in facebook could indirectly have an impact on succession in family firms.
The news this week that Mark Zuckerberg plans to give away 99% of his shares in Facebook, worth around $45 billion, isn’t going to be copied by every business leader, but it might have an interesting indirect affect on succession at family businesses.
To begin with, the idea of giving away a business for whatever reason goes against the values of nurturing a company to pass onto the next generation. And it’s probably right in saying that the Zuckerbergs don’t plan to handover Facebook to their newly born child, Max. The tech sector, more than any other, seems to be against creating family dynasties.
But giving away businesses for a philanthropic purposes is gaining in popularity among all businesses, whether family, or non-family controlled. The Giving Pledge, started by Bill Gates and Warren Buffett in 2010 in an attempt to follow their example and get the world’s super rich to give the majority, if not all of their wealth, away during their lives and after their death, is gaining in popularity. Zuckerberg is just the latest in a long line of those committed to giving away their fortunes.
Most of these names are very successful first generation entrepreneurs, but not all of them. Individuals whose fortunes are linked to family businesses are also on the list like David Sainsbury, Azim Premji, David Rockefeller, Richard Marriott and Jon Huntsman.
No doubt new names from family business backgrounds will be added in the years ahead. But what is expected to really accelerate the “giving away” of business assets in the future are the attitudes of the next generation. Surveys show that social issues linked to philanthropy are influencing the next generation more than ever. These influence will have a big say in how the next generation run businesses they inherit over the next 10 years and beyond.
Given the huge business role model Zuckerberg has become and the growing awareness of philanthropy among the next generation, the giving pledge, and its variations, will grow as a factor in how family businesses are run in the future. That may have a profound affect on succession planning.
About the Author - David Bain is the owner of Family Capital, a modern publishing company dedicated to the global family business sector. Visit their website to find out more.