Early morning calls aren’t unusual when you’re running one of Hong Kong’s most prominent jewellery companies. “We were about to open a new office, so it was busier than usual,” says Theodore Ma, one of the next-generation leaders of the MaBelle jewellery enterprise. “But when I picked up the phone I didn’t expect my dad to suggest changing plans and turning the office into a co-working space.”
While Theodore continues to serve as a managing director of MaBelle, the decision he and his sister Erica took in 2012 unlocked the entrepreneurship spirit they had both cultivated while at Stanford University. This venture added a new dimension to the family legacy, as they applied their operational knowledge to entrepreneurship and technology investments, marking the initial steps towards what would become CoCoon, one of Hong Kong’s leading start-up accelerators.
Investing in impact and innovation
They are not the only successors to have stepped away from the path laid by previous generations. In interviews with family members of 100 large family-owned enterprises, Professor Dennis Jaffe found that the most successful leaders acknowledged that their legacy business would not grow indefinitely. To pass something on to the next generation, the majority believed they either needed to sell the legacy operation or build new ventures.
“For any business, the only constant is change,” says Ma. “For family businesses this can be difficult, but, if they don’t adapt, it’s very hard for them to continue past two or three generations. It is about finding a way to win: you need to step out of your comfort zone and engage with your environment.”
It's about finding a way to win: you need to step out of your comfort zone and engage with your environment
Theodore Ma, managing director of MaBelle
What the next generation decides will have major implications for the global economy. According to former investment banker Ken Costa, baby boomers are currently transferring as much as $100tn to successors and charities. By some estimates, inherited wealth has already surpassed self-generated wealth, and the gap is likely to widen as the youngest baby boomers enter their sixties over the next couple of years.
A lot hinges on their success. The next generation will take the reins amid rising geopolitical tensions and economic uncertainty, with nearly a third of respondents to the World Economic Forum’s 2024 Global Risks Report expecting more turbulent conditions over the coming years.
Rising generation not afraid of taking risks
Asia
Americas
MEA
Europe
Source: PWC family barometer, 2023
A new vision for the family’s future
Yet there are reasons to be optimistic, says Honora Ducatillon, Head of Family Advisory at Pictet Wealth Management. “This new generation of family leaders is globally connected and highly educated, with an instinctive understanding of the ‘big picture’ and a flair for developing networks in the new economies. More than ever before, it is about opening up their families and businesses to the world – building communities, skills and opportunities for their stakeholders and for the larger community.”
There is also a virtuous aspect to this. As Theodore Ma points out, “Sharing ideas is a net gain. By diversifying, we are also learning a lot about other businesses and de-risking ours.”
By engaging in this process, successors are able to identify where the family business can have the greatest impact on a changing world. “Being a wealth owner instils the responsibility to give back and do your share to make things better for people and the planet,” says Els Thermote, the daughter of one of the co-founders of TVH, a global material handling, construction and agricultural parts conglomerate. “The entrepreneurial spirit, the passion for healthy food and the negative impact our current food system has on our health and the environment inspired the strategy of our family office.”
“Being a wealth owner instils the responsibility to give back and do your share to make things better for people and the planet
Els Thermote, the daughter of one of the co-founders of TVH
While still remaining actively involved in TVH through the board, Thermote stepped away from day-to-day operations in 2019. Combining this with a shift in shareholdership allowed her to set up The Nest, a family office focused on finding scalable solutions to fix the global food system.
“To have a transformational impact you need to be able to support the early stage – maybe slightly riskier – businesses,” she explains. For family businesses, which have long been characterised by their preference for stability over change, this attitude to risk represents a significant departure from tradition. More than half of the next generation of wealthy families acknowledge they have a greater risk appetite than their parents, according to PwC’s 2023 Family Barometer report.
Some have attributed this to a more global education1, but it may also be the result of changing approaches to succession. A study published in 2022 revealed that 80 per cent of families with average net wealth of £1.1bn believe impact investing has the ability to prepare generations to take on greater family responsibilities.
Looking beyond the legacy
Unlike their predecessors, who typically learned the ropes inside the family business, this generation of successors has used its experience to invest and build ventures outside the legacy business. “We know what’s an acceptable risk,” says Thermote. “Across our portfolio we have a venture part, a later stage division, and a buyouts-focused unit, so we don’t put all our eggs in one basket.”
To demonstrate the impact of solutions across this portfolio, Thermote bought a 120-hectare organic regenerative farm in the Tournai region of Belgium where they apply rotational crop grazing and strategic tillage to improve the quality of soil and pioneer new methods of bio-organic farming.
Buying the farm was not only a way to educate people but also to inspire other investors to use their capital to do good in order to speed up the transformation. It is also a way of supporting the longer-term family legacy. “The farm has helped us immerse our children in the ideas of sustainable agriculture from a really early age,” says Thermote, who has already started involving the younger members of the family in the family office as part of the succession planning.
“Through observer roles in the family board and regular meetings, we aim to familiarise them with our investment strategy and nurture their sense of responsibility and engagement as future shareholders.”
Through observer roles in the family board and regular meetings, we aim to familiarise them with our investment strategy and nurture their sense of responsibility and engagement as future shareholders
Els Thermote, the daughter of one of the co-founders of TVH
Growing up amidst the family business gives the next generation time to figure out where they fit and add value, says Ma, who notes that many will decide to tread their own path, and that parents should encourage this. “My father always talks about his mother,” she says. “She would tell him and his three brothers, ‘You cannot all fish from the same pond: you have to go out to find new waters.’”
This entrepreneurial attitude has been passed down through the Ma family, and eight years ago Theodore and Erica turned it into a tangible part of their family activities, launching a non-governmental organisation (NGO) to teach entrepreneurship, alongside their broader community building and investment work.
“To date, we’ve taught more than 20,000 secondary school students to develop entrepreneurial skills and have put them together with some of the most exciting start-ups across our network for internships,” says Erica Ma, noting that the value a family can create is no longer tied to physical assets. “I believe my grandparents would be pleasantly surprised by the impact we create.”
