In February 2022, a handful of senior executives gathered within the German city of Mettingen, 50km east of the Dutch border, to debate an formidable new technique for Cofra Holding, the family-owned firm for which they labored.
The group toured the household archive and stood by the city’s life-size statues of Tüötten, the native identify for itinerant Catholic material retailers. In 1841, two of these merchants, brothers Clemens and August Brenninkmeijer, arrange a clothes warehouse within the Dutch city of Sneek. It went on to grow to be C&A, the retail chain that’s Cofra’s best-known model.
That historical past continues to be an necessary a part of Cofra’s story however the executives have daring plans for the longer term: the Brenninkmeijers’ objective is to maneuver Cofra past retail into areas corresponding to sustainable meals and clear vitality.
To drive this variation, the household is breaking with longstanding traditions of self-sufficiency by opening the corporate to exterior capital.
Such a shift is a defining second for a famously secretive firm corresponding to Cofra but it surely dramatises most of the dilemmas confronted by family-run companies world wide.
Profitable household corporations satisfaction themselves on what they consider to be their capacity to take the long-term view and to take care of a particular set of values. They usually prefer to deal with their very own affairs in personal and make their very own plans for management succession.
However Cofra has been pressured to re-examine many of those core rules because it invests in what it sees because the industries of the longer term — asking how far it’s going to open itself as much as appeal to funding and outdoors expertise.
For listed corporations, there are detailed procedures, guidelines and public debates about the way to handle questions of succession and transparency. However for the household corporations which can be privately owned, the trail is commonly a lot much less clear. The need to increase and make investments can usually collide with what are sometimes considered household firm shibboleths, corresponding to fiscal conservatism, maintaining full possession and passing key administration jobs on to relations.
All of this issues due to the prevalence of household possession. The Household Enterprise Community, an organisation of 4,000 households worldwide, estimates that two-thirds of all corporations are household managed, starting from small native companies to world entities corresponding to Lidl proprietor Schwarz, which employs over half 1,000,000 individuals.
Household-controlled companies account for 70 per cent of worldwide gross home product, the FBN estimates, and make use of 60 per cent of the worldwide workforce. How these companies stability short-term calls for and long-term objectives has implications for employment, public coverage and prosperity.
Longstanding household companies corresponding to Cofra “reside for this concept that should you take over the household enterprise, you hand it to the subsequent technology higher than what you inherited”, says Morten Bennedsen, professor on the College of Copenhagen and an skilled on household corporations.
However Thomas Hagmann, a accomplice at innovation consultancy Innosight, factors out the risks of making an attempt to keep away from these questions. A mindset of merely paying common dividends to maintain the homeowners whereas the corporate progressively stagnates “will endanger your expertise base and your loved ones enterprise”.
Cofra argues that it has little selection. “By opening up [to outside capital], you make sure that you constantly have the home windows open and also you’re forward of the wind,” says Boudewijn Beerkens, chief govt of Cofra since 2019 and the organiser of the Mettingen journey. “And that’s what it takes to stay aggressive.”
Generational transitions
Of their bid to stay aggressive, no query is extra thorny for household corporations than succession — and the dangers that handing the keys over to heirs generally is a path to mediocrity.
Bennedsen says privately held household corporations lack most of the governance checks and balances to which a listed firm can be topic and don’t appeal to the identical stage of exterior scrutiny. The suspicion {that a} household scion occupies the highest job due to their surname, reasonably than their competence, additionally haunts such organisations.
The Brenninkmeijers have advanced a selected manner of conserving household management and managing succession based mostly on a mix of household {and professional} administration.
A restricted and really personal possession group sits on the coronary heart of the enterprise, nicknamed the Sneekerkring, or “Sneek circle”, after the Dutch city the place C&A was born. It consists of roughly 60 relations however its make-up and even the precise variety of members are secret. Senior relations transfer off the “SK” of their mid-50s, robotically refreshing the possession group.
Till the Nineties, solely the sons of former SK members have been admitted to the organisation. A ten-point household code, referred to as Unitas, used to state: “Enterprise issues are males’s issues! Make sure that no girl has affect over the enterprise.”
Brenninkmeijer girls straight descended from SK members are actually in a position to be a part of the possession group.
Together with many others, the household have additionally come to grasp that involvement on the high stage within the enterprise is more and more a selection reasonably than an obligation for descendants.
Financial anthropologist Bridget Kustin, a senior analysis fellow and director of Oxford Saïd Enterprise College’s Possession Challenge 2.0, says 80 per cent of the homeowners of household companies to whom she spoke for the undertaking have been males over 50 who “knew from a really younger age that they have been purported to be in that place”.
However when EY ran a ballot of greater than 34,000 college college students with a household enterprise background in 2013-14, it discovered solely 5 per cent meant to hitch the agency even 5 years after commencement.
Having inspired their offspring to use for the most effective universities and MBA programmes, “most households have the issue that the children don’t need to return to the household companies”, says Bennedsen. “They need to go to [consultancies] McKinsey or Bain, or begin up a agency as a result of they suppose they’re the subsequent Steve Jobs . . . It isn’t very horny to return to Mum and Dad.”
Charlotte, a sixth technology Brenninkmeijer who’s a part of the Sneekerkring and chief govt of the Anthos Household Workplace, which advises the broader household on wealth administration points, acknowledges that working for the agency “is just one manner”.
“The vast majority of relations do select one other path and don’t work for the household enterprise . . . I found that I did have a ardour for enterprise,” she says in an interview with the Monetary Occasions. When the invitation to hitch the internal circle comes “it’s essential need it and also you want to have the ability to do it”, she provides.
Beerkens had sworn by no means to work for the group although his mom is a Brenninkmeijer. However he says that when the corporate headhunted him from Dutch conglomerate SHV in 2016, “the cultural recognition was significantly better than I had anticipated . . . Lots of issues [did] not should be defined”.
Johanna Waterous, a former McKinsey advisor who has served on the board of Cofra and continues to advise it, says that lately relations are pulled in the direction of the group by the sense that “you’re in it to be a power for good”.
However as soon as there, they’re nonetheless fastidiously educated and chosen for positions within the enterprise — simply as they have been within the days when younger male relations have been housed in strictly supervised “households” in company-owned flats or above branches of C&Some time they have been ready for necessary jobs within the firm.
Intervals spent working or finding out elsewhere may also help allay the notion of household favouritism that stalks even the distant descendants of firm founders. In her e-book Lead Your Household Enterprise, Julie Charlestein states bluntly that it was “an unavoidable, unassailable reality” that she achieved her place as chief govt of Premier Dental, a dental tools firm based by her great-grandfather, by means of “nepotism”.
However an MBA and outdoors expertise helped soften any notion she was unqualified when she took the function in 2016. “I used to be glad that I had labored exterior. It gave me an extra stage of validity,” she says.
Employed fingers
Another choice is the “professionalisation” of the enterprise — when possession stays with the household however non-family managers are employed to supervise day-to-day operations.
The Brenninkmeijers have lengthy finished this and important latest hires embrace British retail grandee Allan Leighton, who chairs the C&A holding firm, and former Ikea govt Giny Boer to run the chain in Europe.
Thomas Brenninkmeijer, a fifth-generation member of the possession group and a Cofra director, says: “The necessary factor is that we appeal to round us a really massive group of terribly proficient non-family members who’ve the very same ardour and examine of the world and society”.
However issues can happen when a non-family chief govt or chair is appointed who’s at odds with the household tradition. That has led some companies to reinstall relations in senior roles to make sure continuity and the retention of “family-company” values corresponding to long-termism, conservatism and duty to wider stakeholders.
Container transport line AP Møller-Maersk final yr elevated fifth-generation Robert Uggla to go the board to “safeguard the momentum of the technique”. Luxurious group Hermès appointed Axel Dumas as chief govt in 2013, placing the sixth-generation member of the family within the vanguard of fierce and finally profitable resistance to Bernard Arnault, whose luxurious conglomerate LVMH had constructed a big minority stake.
Longer-lived household corporations have discovered that having the ability to select from a pool of essentially the most competent descendants of the founder combines the most effective facets of inside understanding of the enterprise {and professional} ability units.
Alexis du Roy de Blicquy, chief govt of the Household Enterprise Community, describes this as “professionalisation of the household as a lot as of the enterprise”.
Beerkens’ problem is to execute the household’s plan for the reinvention of Cofra, transferring it away from its retail roots in the direction of what he says will finally be a holding firm break up roughly equally between actual property funding, personal fairness and working companies, together with C&A.
In 2020 it purchased Sunrock, which specialises in large-scale rooftop photo voltaic vitality initiatives. Final yr, it acquired Dalsem, a developer of greenhouses, as a part of its push to assist transition to extra sustainable meals programs.
“Only a few companies say: there’s going to be an issue in 20, 30, 40, 50 years . . . How am I already organising myself immediately to have the ability to truly assist resolve that drawback?” says Beerkens.
However diversifying past a long-established set of core companies brings further dangers and infrequently requires further capital. The Brenninkmeijers got here to the realisation that a few of that funding must come from exterior the group. It was a big second; aside from the itemizing of a minority stake in C&A’s Brazil operation in 2019, the household had beforehand relied totally on Cofra’s inside assets to fund its development.
Beerkens satisfied the household that by discovering like-minded co-investors for property, funds and joint ventures operated by its wholly owned subsidiaries, Cofra might improve its scale and social affect.
Charlotte Brenninkmeijer says the transition is an indication of how the household firm continues “to adapt and reply to the challenges that the world is dealing with”. The brand new technique has excited youthful relations and inspired them to suppose “they may have completely different alternatives [in the business]”.
These are necessary classes for different household companies. FBN’s du Roy de Blicquy says that over the previous decade there was an growing recognition that “nextgens”, because the community calls them, should be extra carefully concerned in shaping technique.
Reducing the veil
Youthful members of household companies are additionally encouraging their seniors to desert conventional attachments to secrecy about their wealth and operations.
Nextgens “have a special relationship with privateness”, du Roy de Blicquy says. They consider “if you wish to make a distinction, it’s important to grow to be extra vocal”. He considers openness is just not solely demanded by the youthful technology of household homeowners; it’s critical to take care of their dedication to the long-term way forward for the businesses based by their extra conservative ancestors.
Like many enterprise households, the Brenninkmeijers have historically eschewed the limelight. “They don’t need to be on ‘lists’,” says boardroom adviser Waterous “They simply need to do the fitting factor, be good enterprise individuals with a capital G. So they simply get on with it.”
However Kustin, of Saïd Enterprise College, says any enterprise that presents itself as a “power for good” can anticipate to draw scrutiny and have its claims put to the take a look at. She factors to the case of Purdue Pharma, the pharmaceutical firm managed by sure members of the philanthropic Sackler household criticised for its half within the US opioid painkiller disaster. It confirmed how “the fitting to that privateness in the case of enterprise affairs is barely as legitimate because the demonstrable good that comes from it”.
Even Cofra, the place an ethical uprightness rooted within the Brenninkmeijers’ deep Catholic religion runs by means of their enterprise, funding and philanthropy, is just not fully past reproach. In a examine funded by the household, historian Mark Spoerer uncovered proof that the German arm of C&A had profited from Nazi “Aryanisation” measures that concerned the seizure of enterprise and property from Jewish homeowners. Spoerer says the revelations shocked the household, who “had this self-picture of being charitable and useful to different individuals with a robust moral dedication”.
In a “toolkit” for accountable household enterprise ready by the Possession Challenge, Kustin urges corporations to codify “immaterial and ambiguous” notions of excellent, corresponding to household values and traditions, into binding commitments round company governance, shareholder agreements and belief configurations.
She additionally advises accountable household companies to publish their company tax charge. It’s an formidable objective, given many household homeowners’ reluctance to debate the sources of their wealth and the taxation of it.
Cofra isn’t any exception; it’s headquartered in Zug, a famously low-tax Swiss canton that’s house to massive numbers of brass-nameplate corporations. Although Cofra factors out it has a fully-staffed workplace there, it’s nonetheless reluctant to disclose even essentially the most high-level element about its revenues, which specialist writer Household Capital estimates at about $4bn.
Beerkens seems to think about the involvement of outdoor capital and administration, together with better transparency, as lesser dangers than growing an insular, defensive mentality.
Requested to checklist the best threats to Cofra flourishing, he cites a possible breakdown within the spirit of Unitas that binds the household and the hazard it’s going to grow to be inward-looking. “Typically, if you’re with a small group, you will get groupthink,” he says.