Healthy carve up

The prickly issue of succession has always troubled entrepreneurs, and particularly very wealthy ones.

No one likes to confront the idea of dying, least of all a business owner who might have delusions of immortality.

However, two decades of warnings from business advisers such as accountants and lawyers do appear to be getting through to wealthy entrepreneurs, who are not only putting in place strong succession plans, but going a step further by making them crystal clear to the wider market.

Melbourne property developer Bruno Grollo – who is perhaps most famous for building the Rialto office tower – is the latest to adopt this strategy.

In an interview with the Australian Financial Review, Grollo has explained how he intends to split his empire between his three children: youngest son Daniel, who has run the family’s Grocon development business for more than five years; eldest son Adam, who is also involved in the family business; and daughter Leeana.

Grollo says his father never split his business empire between he and his brother Reno; the two of them did it themselves in 2000 in an amicable parting of ways.

Grollo said he wants the same for his children.

“I suppose I’ve got to get things in order before I die. I don’t want the kids fighting,” he said.

“As a father you think your kids are happy just being your kids and owning everything. But they’re not, they want to own something and that’s fair enough.”

Grollo is following a similar approach to the late Richard Pratt, who carefully carved up his empire well before his death and, perhaps most importantly, went on the record to explain to the media and the market how the split would work.

This is smart on two levels.

Firstly, it ensures all the children know where they stand. If anyone makes a “land grab” after the entrepreneur dies, everyone in the market will know.

Secondly, it ensures a smooth transition of the business to new ownership. Customers, suppliers and other stakeholders have time to come to grips with the change in ownership and work through any ramifications that might have.

Whether the business is to be sold off, broken up or run by other family members, continuity is important.

Without it, value is destroyed and everybody is worse of.