BEHIND THE STAYING POWER OF WEALTH CREATION IN …images.forbes.com/forbesinsights/...Wealth_Creation...of billionaires, to 29%, and in its share of wealth, to 30% (Fig. 2). Europe

BEHIND THE STAYINGPOWER OF WEALTHCREATION IN EUROPEFAMILY, LONG- LIVEDAND LONG- TERM- ORIENTED

IN ASSOCIATION WITH:

CONTENTS

Introduction ........................................................................................................................ 2

Key Findings ....................................................................................................................... 3

The Big Picture: Europe’s Ability to Craft Fortunes Over Time ......................4

Interview With Michael Otto ........................................................................................ 8

Longevity of Fortunes: Western Europe ................................................................10

Notable Achievers From Europe’s Longstanding Fortunes ............................14

Interview With Dr. Stephan Schmidheiny ..............................................................18

Longevity of Fortunes: Emerging Europe ............................................................20

Interview With Adam Goral .......................................................................................24

A Look Into the Future .................................................................................................26

Methodology ....................................................................................................................27

Appendix ...........................................................................................................................28

2 | BEHIND THE STAYING POWER OF WEALTH CREATION IN EUROPE

INTRODUCTION“Behind the Staying Power of Wealth Creation in Europe” analyzes wealth creation in Europe

and the longevity of its fortunes over the last quarter-century. Western Europe emerges as a

bulwark of stability in its fortunes, having the highest longevity rate in the world. The staying

power of European fortunes is based on its tastemaker brands, and on keeping businesses

private and in the family. Overall, Europe has had a strong pace of growth in wealth creation,

having been aided by the emerging markets of Central and Eastern Europe. However, the

momentum may have slowed, which raises the question: Can Europe hold on to its share of

wealth creation based on its old strengths?

Forbes Insights and Societe Generale Private Banking would like to thank the

following individuals for their time and expertise:

• Adam Goral, founder and president of the management board, Asseco, Poland

• Michael Otto, head of the Otto Group, Germany

• Stephan Schmidheiny, industrialist and philanthropist, Switzerland

COPYRIGHT © 2014 FORBES INSIGHTS | 3

KEY FINDINGSEUROPE HAS EXPANDED ITS SHARE OF THE WORLD’S LARGEST FORTUNES:

Over the last 25 years, Europe has increased its share of the number of the world’s biggest fortunes, from 27% to 29%. The aggregate worldwide share of wealth held by Europe’s richest rose from 24% a quarter-century ago to 30% today. See page 4.

Europe had the second-highest increase in the number of fortunes, after the Americas, and the second-highest increase in the aggregate growth of fortunes held by the wealthiest individuals. See page 5.

WESTERN EUROPEAN FORTUNES ARE THE LONGEST-LIVED WORLDWIDE:

Of the fortunes that have been on the Forbes Billionaires lists for at least a quarter of a century, Europe has the highest survival rate, 78%, followed by the United States at 73%. See page 11.

These longest-surviving European fortunes are mostly private (67%) and family controlled or owned, with the majority (52%) being managed or owned by third and fourth generations. See page 12.

Retail is how the biggest group of these long-lived fortunes (30%) were generated. Many of them also are based on very strong brands and worldwide tastemaker status.

EUROPE OWES ITS PACE OF GROWTH IN FORTUNE CREATION OVER THE LAST 15 YEARS TO EMERGING

EUROPEAN MARKETS:

Emerging Europe accounts for 42% of the number of Europe’s largest fortunes, and 39% of wealth held by Eu-rope’s richest individuals, with the majority of these fortunes being held by Russians (27%) and Turks (11%). See pages 6 and 28.

Back in 2002, Germany was the country in second place for most billionaires by country, after the United States. It was overtaken by Russia in 2008. (Russia has since been overtaken by China.) See page 5.

MOST RECENTLY, EUROPE HAS BEEN GENERATING NEW FORTUNES AT A MODERATE PACE:

Europe has generated 26% of the world’s new fortunes over the last two years, behind the Americas (35%) and Asia-Pacifi c (34%). Within Europe, more of the newest fortunes have been generated in Western Europe than in emerging Europe. See page 26.

The good news is that Europe can bank on its creativity. Many of the new fortunes rely on tastemaker brands. However, the question remains: how “new” are these new European fortunes? Research shows that many Western European fortunes are the result of the second generation reaching billionaire status based on companies started years ago. And in emerging markets, some new fortunes still harken back to the post-communist asset privatiza-tions. See page 26.


How has the continent fared over the past 25 years?

In this section of the report, Forbes Insights examines

the longevity of the region in terms of producing for-

tunes. In this case longevity is understood to mean the

region’s ability to mint fortunes, as compared with

Asia, the Middle East and Africa, and the Americas.

All parts of the world

have undergone seismic

economic upheavals over

the last quarter-century,

both positive and nega-

tive. The opening up of

post-communist Europe,

the economic opening of

China and the economic

growth of some parts of Africa are among the positives.

The recent fi nancial crisis and its global repercussions

are among the negatives. How have these long- and

short-term developments aff ected wealth creation in

Europe as compared with other regions?

Overall, the world’s billionaire class is much big-

ger today, with 1,426 billionaires, or 620% more than

a quarter-century ago, with a combined net worth of

$5.4 trillion. Europe has grown in terms of its share

of billionaires, to 29%, and in its share of wealth, to

30% (Fig. 2).

Europe has kept pace with the rest of the world in

terms of fortune creation (Fig. 3). In fact, it has recorded

the second-highest growth in aggregate worth of for-

tunes, or the value of all billionaire fortunes combined

(Fig. 4). Europe owes this pace of wealth creation to

a large degree to the emerging European economies,

mostly Russia and Turkey, which by now account for

42% of the total number of fortunes (Fig. 5) in Europe

and 39% of the wealth held there (Fig. 6).

THE BIG PICTURE: EUROPE’S ABILITY TO CRAFT FORTUNES OVER TIMELooking back a quarter of a century, to around the time when Forbes started tallying the

biggest fortunes in the world, there was a total of 193 billionaires, with Europe accounting for

53, or 27% of them (Fig. 1). In total they were worth $350 billion (equivalent to $677 billion

today after adjusting for infl ation), with Europeans accounting for 24% of that.

Europe has kept pace with the rest of the world in

terms of fortune creation.

Figure 2. European fortunes as a percentage of total wealth

EuropeanFortunes

Figure 1. European fortunes as a percentage of total number

29%25 years ago: 27%

Today: 29% 27%

25 years ago: 24% Today: 30%

30% 24%


The milestones of the Forbes Billionaires list illus-

trate well the progress of emerging Europe. Back

in 2002, Germany was the country in second place

for most billionaires by country. It would enjoy this

spot for six years, to be overtaken by Russia in 2008.

(Russia has since fallen to third place, having been

overtaken by China.) Then in 2011, Moscow became

the city with the most billionaires.

Among the countries that were represented on the

Forbes Billionaires list 25 years ago, Turkey has had the

highest growth in the number of fortunes over the last

quarter of a century (Fig. 7a). Turkey is still an emerg-

ing economy, hence the high growth rate. Its markets

opened up in the early 1980s, when Turgut Ozal was

prime minister. In fact, the country debuted on the

Forbes Billionaires list 25 years ago with two billion-

aire families, Sabanci and Koc. Both families are still

on the list today.

The other two European countries that experienced

high growth rates in the number of billionaire fortunes

over the last 25 years are Spain and the United Kingdom.

Given that Spain is a smaller economy than some

Western European stalwarts, Spanish fortunes don’t yet

have the staying power of British or German fortunes,

and over the years there have been bigger fl uctuations in

the number of Spanish fortunes due to economic condi-

tions. Larger economies have an edge in terms of fortune

stability. In many cases fortunes in these countries have

been amassed for such a long time that they have devel-

oped a cushion against economic upheavals.

Figure 3. Europe as a fortune generator (in terms of number of fortunes) over the last 25 years

REGION Number of Number of Growth rate fortunes in 1989 fortunes in 2013

The Americas (excl. U.S.) 14 129 820%

United States 55 442 700%

Europe (with Russia) 53 409 670%Europe (without Russia) 53 299 460%

Asia-Pacific 59 386 550%

Middle East & Africa 12 60 400%

Figure 4. Growth in aggregate worth of fortunes over the last 25 years

REGION Aggregate worth Aggregate worth Percentage in 1989 (bil) in 2013 (bil) increase

United States $96 $1,872 1,850%

Europe $85 $1,627 1,814%

The Americas (excl. U.S.) $32 $572 1,688%

Middle East & Africa $15 $205 1,267%

Asia-Pacific $122 $1,146 839%


The United Kingdom has also recorded high

growth in the number of fortunes. While the UK is

a mature economy, it is also entrepreneurial in spirit,

with as many as 81% of its billionaires being self-made,

as compared with 33% in Germany or 43% in France,

according to the Forbes Insights/Societe Generale

report, “Global Wealth and Family Ties.” The UK has

old fortunes that made it into the Forbes Billionaires

list 25 years ago. These are David Sainsbury, of

retailer Sainsbury’s, and Gerald Grosvenor, 6th Duke

of Westminster, whose wealth is based on real estate

holdings dating back to the 1600s. But the country also

manages to create fortunes from scratch at a faster pace

than many other Western European countries.

France has had a relatively moderate growth rate of

new fortunes (Fig. 7a). That is, however, due partly to

the fact that among mature European countries, France

has the highest percentage (64%) of fortunes run with

family involvement, including family ownership. As

will be explained later, this puts France at a disadvan-

tage when counting individual fortunes, which is the

basis of the Forbes Billionaires list methodology.

Western European advantage in fortune accumu-

lation has traditionally been in creating very strong

brands, which have been and continue to be desired

worldwide. In fact, as will be explained later in this

report, many longstanding European fortunes are

tied to such brands. This has given old businesses

new growth opportunities in exporting fi rst to Asian

markets, and now increasingly to emerging markets.

European creativity should continue to fuel brand cre-

ation, and worldwide demand for it should continue.

On the fl ip side, it is a disadvantage that so many

European fortunes are indeed tied to brands. It points

to the fact that Europe is not as diverse in terms of

wealth creation as other regions. Europeans haven’t

been able to build new fortunes based on technology to

the same degree as other regions. Russia’s Yuri Milner

was a big backer of U.S. tech companies, and there is

France’s Internet king Xavier Niel, but otherwise there

aren’t too many recent homegrown European tech for-

tunes, while there are multiple technology fortunes in

the U.S. and now also in Asia.

In this regard, Europe may be wise to look back

and learn from its own history. At one time, it had

a big impact in technology, with companies like

Siemens, founded in Germany in 1847, where the fam-

ily remains involved to this day. Or more recently,

Computer Associates, founded by Walter Haefner, who

was present on the Forbes Billionaires list 25 years ago

and whose descendants remain on the list today.

It is not considered easy to build a fortune in Europe

as, by worldwide standards, the tax structures and the

general approach to entrepreneurship is not considered

progressive.

Figure 6. In terms of wealth held

Western Europe versus

Emerging Europe

Figure 5. In terms of number of fortunes

42%Western: 58%

Emerging: 42%58%

Western: 61% Emerging: 39%

39% 61%


Figure 7a. Growth in number of fortunes from 1989 to 2013

Figure 7b. Growth in aggregate wealth from 1989 to 2013 (in billions)

Sweden

$8—>$88

Spain

$4—>$100

France

$7—>$143

Turkey

$3—>$74

Austria

$1—>$27

Germany

$31—>$296

UK

$9—>$121

Netherlands

$7—>$21

Switzerland

$5—>$50

Italy

$10—>$113

Sweden

3—>14

Spain

3—>20

France

6—>24

Turkey

2—>43

Austria

1—>8

Germany

19—>58

UK

6—>37

Netherlands

3—>6

Switzerland

4—>13

Italy

6—>23


Michael Otto is the majority owner of the Otto Group, a

German holding company with 123 companies that derives

about 80% of its sales from online commerce, putting it

in second place worldwide behind Amazon.com. Born in

1943, Otto was a refugee from West Prussia at the end of

World War II. His father, Werner Otto, founded the busi-

ness as a catalog company; today Forbes values his son’s

worth at more than $14 billion (as of March 2013), No. 61

on the Forbes list of the top 100 billionaires. He projects

a modest personal style and spends much of his time and

money promoting environmental and social causes, such

as sustainable cotton farming in Africa.

MICHAEL OTTO

Forbes Insights: Do you think growing up in those cir-cumstances makes you more frugal with your money, even though now you could aff ord to buy whatever you want?

Otto: Yes. It’s true. I think it’s better to do things for soci-ety with money. It makes more sense to me, and also for me it feels better to do intelligent things—perhaps it’s too much to say good things—with money rather than just spend it on things that are not very interesting for me. An entrepreneur also has a responsibility to society.

In your father’s book, he wrote that intelligence can-not replace experience, and so he said that as an older man he knew a lot of stuff that he did not realize when he was a younger man.

Over time there was, of course, always a lot of learning by trial and error. In a lifetime you make so many mis-takes, so you know what could happen. And therefore, when the members of the executive board are talking about their overall strategy, they come to me and we discuss, and there I can help a lot with my experience.

Of course you need both. Intelligence is not unimport-ant. In former times, when I had teams together for projects, I always had a mixture of young people, who bring in new thinking because they are not burdened with too much experience.

An interview with…


People say that they have to read your unhappiness because you are so calm on the surface.

It is extremely seldom that I bang on the table, be-cause I think it must be possible to solve problems in a very human and civilized way. One must accept that if somebody is making an error, or if he makes a presen-tation that is really not good, he is nevertheless trying to do his best.

Very often, I think, it is a sign of weakness, to show that I am the boss and therefore I have the right to tell you what is right and wrong. If a boss is not accepted by the force of his personality, but because he acts aggres-sively, I have a problem with this. I don’t have to defend my position, so, of course, that makes it easier.

You don’t always have the latest gadgets, and you don’t love gadgets the way some people do.

That’s right. Of course, I have an iPhone and an iPad, but it is true that I don’t have to have the latest gadgets every six months. What I think is even more important is that I have a very deep understanding of technical development.

Since I became CEO of our group in ’81, every two years I have made a trip to the United States with the IT mem-ber of our executive board for eight to 10 days. We visit small and big IT companies, software and hardware companies. I was just interested, not in what they would present at the next fair, but what they are working on in laboratories, and what would be interesting in two or fi ve years. Therefore, I made many decisions quite early in our group, just before products entered the market.

You will tolerate mistakes if they are for a good reason?

I think the biggest mistake is not to make decisions or not to develop new concepts.

Of course, it is important that a majority of the decisions will be right. But nevertheless, there are also a lot of er-rors. And if one cannot bear errors, one must look for another job. If an entrepreneur cannot accept mistakes, then he really should not become an entrepreneur.

“If an entrepreneur cannot accept mistakes, then he really should not become an entrepreneur.”

Interview conducted by Andrew Tanner


Before the statistics, some explanation about why

Western Europe, as opposed to the U.S. or other

regions, has two diff erent categories of fortunes: indi-

vidual and family fortunes. Forbes lists tally only

individual fortunes. In other words, to appear on the

list each individual has to have a net worth of at least $1

billion. There are two reasons why it’s harder to be tal-

lied as an individual billionaire coming from Europe.

First, many of the European families are older than

in other parts of the world, some coming on fi fth or

sixth generations. Already, a quarter of a century back,

when Forbes fi rst started to tally the world’s fortunes,

Europeans were unique.

While roughly 60% of

these fi rst classes were

self-made, only Europe

had predominantly old,

inherited money.

That means more

family members among

whom wealth is divided,

resulting in dilution of

wealth, which means that while families may have bil-

lions, individual members of these families may not, or

it’s impossible to determine individual allocations.

As an example, when last writing about the Dutch

Brenninkmeijer family in 2003, whose ancestors

founded C&A retail stores in the UK, Forbes esti-

mated that the family had some 200 members. And the

German Von Siemens family, whose ancestor Werner

von Siemens co-founded the diversifi ed electrical engi-

neering giant in 1847, had some 180 family members

when Forbes last looked at it a decade ago.

Second, the families keep information about how

the fortunes are allocated among its members confi -

dential. Fortunes are often based on private companies,

and even if not, families keep controlling stakes in

some public companies in pools. It is only when a fam-

ily member decides to break ranks that information

about allocation becomes public.

Such was the case with Maja Oeri, a descendant of

Fritz Hoff mann-La Roche, the founder of drug giant

Roche, who recently joined the world billionaire

ranks, debuting with an estimated individual fortune

of more than $1.6 billion, according to Forbes.com.

Her entrance was due to her 2011 decision to pull her

5% stake in bearer shares out of the family pool. While

she reportedly said at the time that she had no falling

out with her family, her decision reduced the family’s

longstanding majority control of Roche. Other mem-

bers of her family, eight relatives in all, control, along

with a nonprofi t foundation, 45% of Roche, worth

$15.1 billion.

There are, of course, cases when inheritance is

transparent. Walter Haefner, one of the members of the

Forbes Billionaires list in 1989, died in June 2012. At

the time, he was the oldest billionaire in the world, at

101 years old. Haefner was the largest individual share-

holder of software maker CA (formerly Computer

Associates). His son and daughter inherited their

father’s stake in CA, in addition to other holdings, and

joined the Forbes billionaire ranks with a net worth of

nearly $2 billion each, according to Forbes.com.

LONGEVITY OF FORTUNES: WESTERN EUROPE

After looking at how Europe stacks up against other regions of the world, let us zero in

on specifi c fortunes. Are European fortunes long-lasting as compared with those of other

regions? In other words, does a European billionaire have a better or worse chance of hold-

ing on to his or her billionaire status over the years? How have these initial 53 fortunes that

were on the Forbes Billionaires list 25 years ago evolved over the years? Of course, the sta-

tistics address only Western European countries, as emerging markets started appearing on

the Forbes Billionaires list only in the 1990s. (Turkey is a special case, as it started emerging

in the early 1980s.)

It is only when a family member decides to break

ranks that information about allocation becomes public.


To account for the fortunes that are less clear about

apportioning wealth after founders’ deaths or are

diluted among multiple family members in Europe,

Forbes Insights added a category for families. If looked

on as individual billionaires, European fortunes have

only a 41% survival rate over a quarter-century.

However, after accounting for dilution among family

members, the survival rate jumps to 78%.

THE SECRET OF THEIR SUCCESSWhat does it take for an individual fortune to sur-

vive—and prosper—for a quarter of a century? Forbes

Insights looked at the industries that generated the

wealth. In cases where the families diversifi ed their

holdings, we classifi ed them by the source of their

wealth or their main or most prominent asset. Italy’s

Agnelli family, for example, whose holdings have been

diversifi ed to include Cushman & Wakefi eld, the New

York-based manager of global real estate, among oth-

ers, is classifi ed as automotive.

Looking at Europe’s longest-standing fortunes, it

becomes clear that retail is what has kept the core of

them thriving for generations. Among some of these

retail billionaires is the German Albrecht family, whose

members own giant discount retailers Aldi Sud and

Aldi Nord as well as the U.S. discount grocery retailer

Trader Joe’s. Altogether, the chains have some 10,000

stores globally. In a bow to tradition—and frugality,

which perhaps shows the philosophy behind building

a fortune on discount retail—Aldi stores do not accept

credit cards in order to keep costs low, according to

Forbes.com.

Another one of these retailers is the Otto Group (see

interview with Michael Otto on page 8). Michael Otto

and his four siblings share ownership of Otto Group,

the parent of more than 122 companies active in retail-

ing and fi nancial services in 20 countries. Started by

Werner Otto in 1949, the company’s management

ranks now are occupied by the third generation. The

group defi nitely keeps up with the times, as it bills itself

as the second-largest Internet retailer worldwide, after

Amazon.com.

The sustainability of wealth in Europe is not based

on the choice of industry per se, however, as Fig. 9

shows a wide variety of industries and particular sectors

that fortunes have been built on. What is most impor-

tant is that in each of these areas the fortunes are based

on brands that over the years have seared themselves

into a global buying psyche.

Figure 9. Survivors by industry

Retail

Food and Beverages

Automotive

Banking

Media

Real Estate

Technology

Packaging

Building and Construction

Oil and Exploration

Home Care Products

Beauty

Jewelry and Accessories

30%

11%

8%

8%

8%

5%

5%

3%

3%

3%

3%

3%

3%

Figure 8. 25-year survival rate

Europe (Incl. Families) 78%

Europe (Individual) 41%

United States 73%

The Americas 57%

Middle East & Africa 50%

Asia-Pacific 22%


“The story in Europe has been for some time, and

continues to be, that people around the world really

look to Europeans to be the tastemakers, to create

brands, to create products,” says Luisa Kroll, Forbes

wealth editor. “When you look at Europe’s longstand-

ing fortunes, you’re struck by the number of fortunes

tied to brands that originated in Europe, but that

have become popular and trendsetters for everybody

throughout the globe.”

Among these brands—which have made and sus-

tained European fortunes for a quarter-century or

longer—are BMW cars, Ferrero chocolates, L’Oreal

beauty products, Tchibo coff ee, Nivea cream, Swarovski

crystals and Louis Vuitton luggage, to name just a few.

“This is where Europe is strongest and where it

can rely on its Old World strengths and a sense of class

that is unique to Europeans and European fortunes.

This will continue to be an advantage, as there will

be sustained demand for European brands in emerging

markets,” says Kroll.

Keeping it in the family is the most important

factor in these companies’ success. Many of these com-

panies are still controlled by the families of the original

founders. “The idea [among European business fami-

lies] is that you want to preserve what you created and

parcel it out, and maintain family control of a com-

pany,” says Tatiana Serafi n, Forbes wealth analyst.

“Families try to keep the businesses from going into

public hands, in order to keep control.”

Indeed, Forbes Insights research confi rms that a vast

majority of these survivors are privately owned, with

two-thirds of them being private companies and a third

public companies. In the end, even families who have

tested the public markets may also believe that private

ownership will allow them to run their businesses bet-

ter, especially in tough times. The Benetton family

took its namesake company private again in 2012 after

a quarter-century trading as a public company, quoting

the “required fl exibility in the medium- to long-term

to take the actions necessary to meet the challenges

arising from the changed competitive environment.”

While by staying private these fortunes have pro-

tected themselves from the scrutiny of the public

markets and everything that goes with them—short-

termism, enhanced disclosure and regulations, for

example—they have also been striving to protect

themselves from themselves, so to speak.

The majority of the survivors are family-owned

businesses, some already in their fi fth or sixth gener-

ations (Fig. 11). That alone already defi es the famous

saying “shirtsleeves to shirtsleeves in three genera-

tions,” which in some form or another exists in many

diff erent cultures, and means that the fi rst generation of

a family business makes it, the second one maintains it,

and the third one loses it.

15%

Figure 11. European survivors by generation

EuropeanSurvivors

Figure 10. European survivors by company type

33%Private: 67% Public: 33%

67%

2nd: 15%3rd or 4th: 52%

5th or older: 33%33% 52%


According to statistics, only 30% of businesses make

it to generation two, and a mere 3% generate profi ts

in generation three. This puts European survivors in

a very exclusive group. Forbes wealth analyst Caleb

Melby notes the importance of the second generation

for the continuance of a family business. “As soon as

the fi rst-generation wealth creator passes that fortune

on to the second generation, protecting that fortune

and hopefully growing it in the second generation

becomes the primary objective of that second genera-

tion and carries on to the third generation,” he says.

He also observes the diff erence between Europe,

where the tradition of holding on to, passing and mul-

tiplying fortunes through generations mostly lives on,

and the U.S., where the Giving Pledge idea—or the

pledge of the wealthiest individuals to give away the

majority of their fortune to charity, which has so far

been signed by 112 mostly American multimillionaires

and billionaires—is changing the tradition of passing

on wealth to younger generations.

This is still not popular among European families,

which tend to carry on family tradition in business.

There are, however, exceptions. As an example, no

descendants of Otto Beisheim, the founder of the

retailer Metro AG, are involved in the management of

the company or hold ownership shares. A 9.1% stake in

the retailer is held by the two Otto Beisheim founda-

tions in Germany and Switzerland.

However, for the majority of European business for-

tunes, the challenge has been to grow the companies,

often while facing ownership claims of tens and some-

times hundreds of descendants of the original founders.

With fortunes that stayed within families, in many

cases they have been divided into branches among chil-

dren early on, such as was the case with the brothers

Schmidheiny. Thomas and Stephan Schmidheiny’s

great-grandfather owned a brick factory, and their

grandfather worked in cement. When their father Max

carved up his estate in 1984, Stephan Schmidheiny

got construction company Eternit, and Thomas got

Holcim, the world’s second-largest supplier of cement

and concrete. Forbes Insights spoke with Stephan

Schmidheiny about the role of family in business, and

how his part of the inheritance aff ected his life (see

interview, page 18).

In other cases families have had to contend with

diff erent views about how to position the business and,

of course, have had to make provisions for those fam-

ily members who have preferred to follow their own

passions and wished to opt out of the family business.

In some cases, this threatens to dilute the family own-

ership stake and can lead to loss of control. To this

end, German retailer Aldi Nord is owned by a family

foundation, which pays dividends to the benefi ciaries.

The purpose of the foundation is to keep the company

intact and prevent it from being split apart by diff erent

branches of the family.

According to statistics, only 30% of businesses make it to generation two, and a mere 3% generate profi ts in generation three.


NOTABLE ACHIEVERS FROM EUROPE’S LONGSTANDING FORTUNES

Sustaining a fortune for 25 years—and in many cases much longer—is an achievement in

itself. Some industries or individual circumstances have presented some of these wealth cre-

ators with tough choices. In many cases, these dilemmas were not of their making. They

inherited family fortunes and fought hard for their legacies. They not only kept these for-

tunes going for many years, but also made a mark—on their companies, families, industries

or countries. Here are the top fi ve notable achievers from among the European “survivors”

whose fortunes were present on the Forbes Billionaires list 25 years ago:

The automobile industry is dominated by family-controlled fi rms—espe-

cially in Europe. The Peugeots at PSA/Peugeot-Citroen, the Piechs at Porsche

and Volkswagen, the Quandts at BMW and the Agnellis at Fiat-Chrysler are

all examples of how family control can bring long-term stability to businesses,

especially cyclical ones like the car industry.

Of these families, Agnelli heir John Elkann has stood out for his skill at

snatching Fiat from near-oblivion in 2004, and for his strategic vision of build-

ing Fiat from an Italian player into a global competitor with its risky investment

in Chrysler in 2009. (As of this writing, a deal had been announced for Fiat to

acquire the remaining shares.)

The Agnelli family has been able to remain at the forefront of the car

industry 115 years after founding Fiat because Elkann’s great-great-grandfa-

ther Giovanni Agnelli had the foresight to decide in the late 1920s that control

of the company should be passed along to a single heir. This simple insight

saved the company from the type of dynastic infi ghting that was on display at

Peugeot in late January 2014, when the family was split over whether to sell

part of its stake to Chinese and the French government, or to issue new capital.

Elkann, 37, was named vice chairman of the carmaker 10 years ago, when

it was nearly bankrupt. His formative years were spent studying engineering

in Turin, with a front-row seat to watch Fiat’s slow collapse. The experience

impacted him deeply, he has said.

Fiat has been able to compete with larger and deeper-pocketed rivals

because of two key insights from Elkann. His “aha” moment was the fi nancial

crisis of 2008, when he realized that Fiat would need a transformational part-

nership to survive.

Elkann sensed that the family had to risk losing control of Fiat in order to

transform it from a European to a global player. It helped, of course, that Fiat

Chief Executive Offi cer Sergio Marchionne already had one turnaround under

his belt and was confi dent he could make the unlikely partnership work. Elkann’s

vision is unpopular in Italy. But it has safeguarded the future of the company.

Elkann also streamlined the corporate structure of Exor, the Milan-listed

family holding company that controls Fiat. As a result, the value of the family’s

stake has tripled in the past 10 years.

JOHN ELKANN for transformation of Fiat


Germany’s Ludwig Merckle inherited a debt-plagued fortune from his

father, billionaire Adolf Merckle, and has executed an impressive turnaround.

His most valuable holding is pharmaceutical distributor Phoenix, one of

Europe’s largest. His father Adolf committed suicide in early 2009 at age 74.

Though hardly known in Europe or even within Germany, Adolf Merckle

was once one of Germany’s wealthiest men. In 2007 Forbes pegged his for-

tune at $12.8 billion. Merckle’s grandfather founded the company in 1881. His

father took over in 1915, and Adolf Merckle in 1967. Merckle’s holding com-

pany, VEM, included pharmaceuticals, machinery and cement companies. At

the time of his death, it had billions in debt and was seeking bridge loans to

give it time to restructure.

Ludwig took over his father’s VEM Holding in mid-2009 and resumed

restructuring. He began selling assets to pay off debt. In the fall of 2009 he

signifi cantly cut his stake in HeidelbergCement. The following year he sold

generic drug maker Ratiopharm to Teva Pharmaceuticals for $5 billion. Ludwig

still owns snowcat maker Kaessbohrer and drug wholesaler Phoenix, which had

to borrow heavily to stay in business but is now paying down its debt.

Today, Ludwig Merckle is back on the list with a net worth of $7.4 billion.

LUDWIG MERCKLE* for restoring his father’s legacy

It is not an exaggeration to say that IKEA changed the way we shop for fur-

niture and how we live. It has clearly delivered on its mission of democratic

design—allowing the not so rich to enjoy high-quality design.

Started by Ingvar Kamprad in 1943 in a small village in a poor region of

Sweden, IKEA is now present in 43 countries. According to Forbes: “At age 86

Kamprad’s great love remains IKEA and the culture he built that made IKEA

one of the world’s most successful brands and retailers. Known for his relentless

pursuit of effi ciency, Kamprad introduced the fl at-pack in 1953, moved pro-

duction to Soviet Poland in 1961 to minimize labor costs and publishes the

Furniture Dealer’s Testament or the ‘IKEA Bible,’ which includes maxims such

as ‘wasting resources is a mortal sin at IKEA.’”

When Kamprad irrevocably transferred the majority of his economic stake

in global furniture retailer IKEA to entities beyond his economic control and

benefi t decades ago, later selling them the balance, his net worth took a drastic

slide, according to Forbes.com. That may have been a thrifty approach to han-

dling taxes or as the company says the wish to “create an ownership structure

that stands for independence and a long-term approach.” The profi ts can only

be reinvested, used for charitable purposes through the IKEA Foundation or

kept as a fi nancial reserve for future investments in the business.

But with the exception of his winery in Provence, Kamprad has historically

shown little interest in the trappings of wealth anyway. He reportedly drives a

Volvo 240 GL he has owned for over two decades. Were it not for the own-

ership structure of his holdings, his wealth would have made him the richest

person in Europe.

INGVAR KAMPRAD for the retail revolution that is IKEA

*15-year survivor.


The Bettencourt family fortune, based on a more than 30% stake in L’Oreal,

is today worth more than $30 billion. This makes the family members the high-

est gainers among all Western Europeans who were on the Forbes Billionaires

list in 1989.

At age 91, Liliane Bettencourt is the world’s richest woman, and has

returned to the richest 10 people in the world for the fi rst time since 1999. Her

and her family’s fortunes benefi ted from the recent runup in L’Oreal’s stock,

which is up by 15% over the last 12 months. Her father, Eugène Schueller,

built a beauty empire based on a hair color dye that he developed back in 1907.

Today his great-grandson Jean-Victor Meyers sits on the company’s board.

From that base L’Oreal has developed into the world’s second-largest per-

sonal care manufacturer, after Procter & Gamble, according to a report from

Euromonitor. Compared with its rivals, L’Oreal tends to be focused more

narrowly on beauty, which has enabled the company to make more precisely

targeted investments in R&D and advertising, says the same report. The com-

pany’s main strengths are its innovation capabilities and a portfolio of products

in all price categories.

L’Oreal has continued to add to its portfolio of products through acquisi-

tions, even during the recent European fi scal crisis. For example, in 2012 it

bought Urban Decay, a California-based beauty brand, which appeals to edgy

yet affl uent younger women.

The company has also expanded aggressively in emerging markets, includ-

ing Asia and Latin America. In China, L’Oreal has been growing by double

digits. In January 2014, the company announced it is acquiring Magic Holdings

International Limited, a specialist in cosmetic facial masks, which is listed on

the Hong Kong Stock Exchange.

News about L’Oreal stock can be expected in April 2014, when the two

major shareholders, the Bettencourt family and Nestlé, currently the sec-

ond-largest shareholder in the company, will no longer have fi rst refusal on

each other’s stakes. According to Nestlé, “The principal terms [of the agree-

ment between Nestlé and the Bettencourt family] are that the Parties cannot

increase their stake in L’Oréal during the lifetime of Mrs. Liliane Bettencourt

and six months after that. As of April 29, 2009, the Parties are free to sell their

shares, each of them having conceded the other a fi rst right of refusal until

April 29, 2014. After that date, the Parties are free to off er the shares to any

third party.”

LILIANE BETTENCOURT AND FAMILYfor the biggest gain over the last quarter-century


Lord David Sainsbury of Turville inherited a stake in Sainsbury’s, one of

the UK’s largest supermarket chains. He served as chairman and CEO but

withdrew in 1998 when he was appointed to the government. It is his work in

government as minister of science and innovation, as well as his contributions

to economic thinking that followed, that earns him a spot on Forbes Insights’

Notable Achievers list.

“He [Sainsbury] has earned the respect of the science and engineering com-

munity by showing real interest in our work and presiding over unprecedented

increases in the science budget,” according to Peter Cotgreave, director of the

Campaign for Science and Engineering. That was not Sainsbury’s fi rst nod to

science. In 1987, he established the Sainsbury Management Fellowship Society

to prepare engineers from the UK to become eff ective C-level executives and

corporate leaders. The program provides $472,000 in MBA scholarships to

young, qualifi ed engineers in the UK.

After eight years in government, Sainsbury wrote “Race to the Top,” in

which he concludes that “the best way for the UK to compete, in an era of glo-

balisation, is to move into high-value goods, services and industries.” He also

calls for a major campaign to improve science, technology, engineering and

mathematics teaching in schools, support for early-stage technology companies

and more government focus on regulations to encourage innovation.

Sainsbury’s view of government is not that it should be big or small, but

that it should be smart. He presents his views in his book Progressive Capitalism,

published in 2013. “David Sainsbury’s thoughtful manifesto for a progres-

sive capitalism draws on his experience in both business and government to

off er an alternative political economy to that of the dominant, and dominat-

ing, neo-liberalism of recent decades,” according to Joseph Stiglitz, the Nobel

Prize-winning economist.

DAVID SAINSBURYfor contributions in politics and economics


Stephan Schmidheiny is a Swiss industrialist turned phi-

lanthropist and environmentalist. Forbes estimates his

net worth at $3 billion. In 1976 Schmidheiny became

president of the board of his father’s Swiss Eternit Group,

a construction materials manufacturer, diversifying the

company away from asbestos long before it was a banned

substance. Since February 2012, he has been appealing a

guilty verdict in a lengthy criminal trial related to alleged

asbestos-related illnesses in a company associated with

Schmidheiny’s Swiss Eternit Group. (Eternit Italia was a

public company, and Schmidheiny’s Swiss Group was

the biggest single shareholder for a couple of years within the 80-year history of Eternit

Italia.) In 2003, Schmidheiny donated all shares of his forestry fi rm Grupo Nueva, worth

$1 billion, to his Viva Trust, whose profi ts are used to promote causes like sustainability

and education. Schmidheiny is an art collector who favors contemporary painters Richter

and Warhol.

DR. STEPHAN SCHMIDHEINY

Forbes Insights: You are one of the long-lived for-tunes—with family descendants present on the Forbes Billionaires list in 1989 and present today as well. What is the secret of your success?

Schmidheiny: Our family has traditionally and over generations adopted a long-term view. Our endeav-ors have not been about short-term income but rather about long-term capital formation and preservation of wealth. A relatively thrifty lifestyle and a sense of responsibility to the community have helped to pre-serve and increase the family wealth over good and bad times. Also, keeping controlling ownership of the business in the hands of those who actually manage it has helped to avoid some of the problems of broader family ownership.

One of the common features of European fortunes that have thrived for a quarter of a century or more is that they are mostly family-owned. Has family leg-acy/ownership played a role in your success as well? How so?

Family ownership of a company means more than a legal title to wealth. It is a form of life, one that is de-fi ned by passionate dedication to a task and by one’s personal fortunes being intertwined with those of the business. In our case the family ownership has defi -nitely and substantially contributed to the success of our business.



Do you feel that having/managing a fortune for so many years is an advantage or disadvantage? In other words, how does having resources, inheritance and tra-dition weigh against newness and starting a business without much capital or help from outside resources?

Creating something new is often seen as destroying the existing. Family values are about avoiding destruction. Thus, combining the virtues of a conservative approach to business with an open-minded, creative and innova-tive spirit is one of the most complex challenges facing privately owned companies. My personal leitmotiv has always been: respect the successful traditions of the past, but let the better be the enemy of the good!

Many of the European long-lived fortunes have been visionary in terms of entering new areas of business or forming interesting joint ventures. What are the exam-ples of the visionary aspects of your fortune/business?

My case has been extreme in this respect, because the business I inherited from my father involved the use of asbestos. Very early on it became clear to me that, while at the time controlled, safe use of asbestos ap-peared to be possible and was regulated in developed countries, this was not going to be the basis for my future business. Thus, I embarked on a far-reaching di-versifi cation program and got involved, for example, in the rescue of the Swatch company, the merger of ABB, the Leica company and extensive forestry operations in Latin America.

What are examples of such visionary activities outside the business areas?

From my forebears I inherited not only business owner-ship but also the inherent sense of responsibility. In this spirit I founded the World Business Council for Sustain-able Development and coined the term eco-effi ciency to motivate business leaders at a global scale to adopt

business strategies and practices respecting their so-cial and natural environment. Also, I donated my Lat-in American holdings to the Viva Trust to establish a working model of the vision of sustainable develop-ment, both at the business and the philanthropy levels.

What are the biggest challenges of being part of a vast fortune in areas outside of business?

Passing family ownership from one generation on to the next is always a very critical point. Apart from the tax burden, which may be very substantial and may in-deed jeopardize continuity of private ownership, there are issues of governance—how to move from a one-entrepreneur command structure to a broader gover-nance—and frequently also issues of values that inevi-tably change when the world around you experiences profound changes. Also, the burden of responsibility of an owner-manager at the top is a state of mind that one can only experience over time to fi nd out wheth-er one feels comfortable and confi dent carrying this weight on one’s shoulders.

Is Europe, as compared with other parts of the world, a good place for wealth creators?

I think Europe has a solidly established tradition of creating and conserving wealth. This is a cultural issue in our genes and part of our upbringing and educa-tion. The legal and regulatory framework for business generally has refl ected this, for example, in the way privately owned businesses and their inheritance are treated. Only in the recent past have U.S.-style short-term-oriented and consumption-driven patterns of business conduct taken root in Europe; it remains to be seen what this means for the future of European family companies.

“My personal leitmotiv has always been: respect the successful traditions of the past, but let the better be the enemy of the good!”

Interview conducted by Tatiana Serafi n


The late Forbes Russia editor, Paul Klebnikov, wrote in 2004,

upon the publication of the fi rst Forbes Russia Rich List, of the

phenomenon of inheritance Russian-style: “Though Russia

emerged from communism just 13 years ago and therefore one

can’t speak of any inherited family fortunes, most of the mem-

bers of the Forbes Russia 100 inherited natural resources and

enterprises from a whole country: the Soviet Union. This kind of

inheritance forms the basis of the net worth of 66 members of our

[2004] list. Only 34 individuals made their fortunes by starting

some fundamentally new business—mostly in the telecommuni-

cations sector, construction, food and beverage production or the

creation of retail chains. The scarcity of new sources of wealth

in Russia indicates to what an extent the Russian economy still

relies on the achievements of the past.”

It seems safe to be on top. Of the original top 10 Russian bil-

lionaires in 2004, all are business survivors except for Mikhail

Khodorkovsky. Russian billionaires are now at a stage when they

are transforming their Soviet family legacy into a real family

legacy. One such Russian billionaire focused on passing on his

wealth is Vagit Alekperov, from the original top 10. He heads

Lukoil, Russia’s largest independent energy company. In 2013 he

willed his stake in Lukoil, nearly 21%, to his only son, Yusuf, with

the caveat that his son will not have the right to sell this stake, so

that Alekperov’s family will remain Lukoil’s biggest shareholder.

RUSSIARUSSIA

Survival rate

38%Aggregate change in the wealth of the Richest 100

2004: $140 billion

2013: $417 billion

Increase: 200%

The richest person

2004: $15.2 billion

2013: $17.6 billion

Increase: 16%

LONGEVITY OF FORTUNES: EMERGING EUROPE The longevity of Western European and emerging European fortunes is not comparable.

Some of the Western fortunes date back hundreds of years. Emerging European fortunes,

on the other hand, have been accumulated starting in the early 1980s in Turkey, and then in

the early 1990s in Russia and other Eastern and Central European countries, as free markets

spread across these regions. Research for this section is based on the Rich Lists compiled

by local-language editions of Forbes based in European emerging markets. Such lists have

been compiled for several years by Forbes Poland, Forbes Russia, Forbes Romania and

Forbes Ukraine.


Despite Ukraine’s sluggish growth since the 2008 global

fi nancial crisis, which plunged the country’s economy into a

downward spiral, Ukraine’s wealthiest have managed to hold

on to their wealth while consolidating assets as government

privatization continues (e.g., coal mines were privatized in the

latter half of 2013). This speaks to the underlying strength of

Ukraine’s base—after Russia, Ukraine was the most important

economic component of the former Soviet Union. Ukraine’s

economy has been struggling since the global fi nancial crisis in

2008, which is refl ected in the relatively fl at fortunes tracked by

Forbes Ukraine during 2011-2013.

INEUUKRA

Survival rate


2011: $56 billion

2013: $55 billion

Decrease: 2%

The richest person

2005: $2.4 billion

2013: $15.4 billion

Increase: 542%

Despite Ukraine’s sluggish growth since the 2008 global fi nancial crisis,which plunged the country’s economy into a downward spiral, Ukraine’swealthiest have managed to hold on to their wealth while consolidating

assets as government privatization continues


Forbes Poland fi rst published a list of the 100 richest Poles

in 2006. All of the original top 10 from 2006 are survivors,

while nine of the bottom 10 are gone. This indicates that the

longer the business is in operation, the higher the probabil-

ity that it will continue. Even more so in that many of these

original top 10 started their business before 1989, the year of

the fall of communism in Poland. Though they ran very small

companies, they were entrepreneurial, and they were ready to

go big when free markets were introduced.

As noted in the 2013 Forbes Insights/Societe Generale

wealth report, it is easier to become a billionaire in an emerg-

ing market than to create or manage a large global company.

It is even more diffi cult to create an internationally recog-

nized brand. Polish entrepreneur Adam Goral, founder of

Asseco, achieved just that by creating proprietary enterprise

software. While it’s not the type of name that is recognized

as a consumer brand, having a proprietary product recognized

by corporations is an equally solid foundation for a lasting

business. (See interview on page 24.)

OLANDPPO

Survival rate


2006: $19 billion

2013: $30 billion

Increase: 58%

The richest person

2006: $2 billion

2013: $3.5 billion

Increase: 75%

…the longer the business is in operation, the higher the probability that it will continue.


Forbes identifi ed the fi rst Czech billionaire, Petr Kellner,

in 2006 with a fortune of $3 billion. Today Kellner’s fortune is

over $10 billion. Forbes Czech Republic published its fi rst Rich List

last year, too early for longevity analysis. The common thread among

the richest Czechs identifi ed by Forbes Czech Republic is that they got

their start in the Czech voucher privatizations in the 1990s. Under the

system, every citizen was given the opportunity to buy, for a moderate

price, a book of vouchers that represented potential shares in any state-

owned company. The voucher holders could then invest their vouchers,

increasing the capital base of the chosen company. This is in contrast to

Russian privatization, which consisted of sales of communal assets to

private companies rather than share-transfer to citizens.

The number of the Czech Republic’s billionaires is sure to grow

over time, benefi ting from the fact that the nation boasts one of the

most developed industrialized economies, and is one of the most pros-

perous post-communist states in Central and Eastern Europe. Now,

having grown their wealth base, many of the richest Czechs are focusing

on giving back. Zdenek Bakala and Andrej Babis are active politically;

Babis’s ANO (Czech for Yes) Party was a close second in November’s

general election, and as a result, Babis has become the fi nance minister

and deputy prime minister for economic aff airs.

IAROMAN

Survival rate


2009: $39 billion

2013: $27 billion

Decrease: 31%

The richest person

2009: $3 billion

2013: $1.5 billion

Decrease: 50%

Forbes Romania’s fi rst Rich List of the 500 richest Romanians

dates back to 2009. Of the 500 enlisted in 2009, 374 of them are

also in the 2013 list, a 75% survival rate.

In 2009 the aggregate worth of all fortunes of the 500 richest

Romanians amounted to $39 billion. As of 2013 they were worth

about $27 billion, or a 31% drop. In 2009, the average fortune was

$78 million, and in 2013, the average was $54 million.

This slide is due to a slow emergence from the global reces-

sion, and a 2013 that Adriana Halpert, former editor of Forbes

Romania, refers to as a year of “total disappointment in great

expectations.” The fi nancial crisis is still putting pressure on

access to fi nancing for Romanian companies. They also face tax

burdens and a lack of predictability in governmental decisions.

ellner,

rtune is

t Rich List HCCZZECHREPUBLIC

The richest person

2006: $3 billion

2013: $10.4 billion

Increase: 347%


Adam Goral, who has been present on the Forbes

Poland Rich List from the very beginning, has built an

international business from scratch. He is the founder

of a software house, Asseco. Back in the late 1980s,

Goral was a university informatics professor. He started

Asseco in 1991, and began to expand internationally in

2004. With $1.8 billion in revenues (2012), Asseco now

operates in most European countries as well as Israel,

the U.S., Japan and Canada and is Europe’s sixth-larg-

est software producer. Asseco Group companies are

listed on the Warsaw Stock Exchange, the Tel Aviv

Stock Exchange and on NASDAQ Global Markets.

Forbes Insights: How did you come to run your own business? What skills encouraged you to do that?

Goral: I have always showed certain leadership skills that helped me attract and unite people. At the end of the 1980s, I worked as a university teacher, specializing in statistics, econometrics and information technology. So I had a natural interest in the IT industry, which be-gan to develop dynamically after the economic system changed in Poland.

Before you started, you visited the United States. How did it infl uence your activity?

I came to understand the diff erences between our ap-proach and the American approach to problem solving. Back in 1991, when I was involved in a group of people who cooperated with the representatives of American business and science, I noticed that we, as Poles, re-sponded to most of the questions by saying that it was

impossible. Whereas Americans, apart from assessing the situation, always tried to fi nd a solution. I realized that our education, in particular during the communist period, was oriented towards unproductive criticism. Hence, when free market opportunities opened up, not everyone was able to fi nd their place in the new reality.

I took advantage of my experience to develop Asse-co. When the fi rst of my employees were assigned to implement software for a bank, I informed them that I did not want to hear that people at the bank were not prepared. Information technology was a novelty, and it was clear that many people would not comprehend it at all. Our responsibility was to help them go through this initial stage and prepare them to be able to use new technologies. I owe such an approach to the Ameri-cans—when they criticize something, they always say why and come up with an idea for how to change it.

ADAM GORAL



What were the most important points in your career?

One of the most important moments was the decision to focus on software development. At that time the money was earned mainly from computer hardware, so opting for the software business was not a simple choice at all. Yet this strategy works great to this day. That was the real beginning of building this company.

The next step was to show other customers that as we managed to complete one project, we would also cope with another 50 implementations. In this way, we have become the number one provider of IT solutions for small banks. Our competitors, who started with large fi nancial institutions, deliberately pushed us into this market. So we had to fi nd the fi rst client who would be-lieve that we were able to serve a medium-sized bank as well. Once we achieved that, we strived to enter the large banks market.

Then we decided to go international and build a power-ful IT group in the region. We wanted to take advan-tage of the opportunities off ered by our growing local economy and rapidly developing capital market. Con-sequently, our company conducted an IPO on the War-saw Stock Exchange and raised the necessary capital to build a large organization. We are now present in 39 countries around the world, and Poles are at the fore-front of this unique project.

Are you ever tempted to sell your company?

I have never come to think that I would like to fi nish this project and sell it. I feel very responsible for a large group of people who believed in my idea and joined me. This building process is my true passion.

Our country has paid a high price for its political chang-es. We wanted to build everything as soon as possible and opened too much for privatization. We gained for-eign capital, but many Polish brands have become part of global companies and their role has been margin-alized. To build a strong Polish company in the global market will not be a matter of a few years, and that is why deeply I care about the success of this project. We are becoming the leaders of a truly international group of companies.

What are the biggest challenges of being part of a vast fortune in areas outside of business?

We are the fi rst generation of Polish entrepreneurs af-ter the economic transformation who were given the opportunity to develop their businesses and prosper. I am proud that, despite so many changes, Poles were able to maintain great stability and today we live in a safe country, which has made huge economic progress over the last two decades. Perhaps because of that, be-ing a public fi gure and a wealthy person is no longer anything unusual in Poland.

“I am proud that, despite so many changes, Poles were able to maintain great stability and today we live in a safe country, which has made huge economic

progress over the last two decades.”

Interview conducted by Jacek Pochlopien


As the chart below shows, Europe is slightly behind

the Americas and Asia-Pacifi c in terms of current for-

tune creation. Within Europe, the momentum seems to

be on the side of Western Europe, which has generated

17% of all new fortunes over two years, as compared

with 9% generated in emerging Europe.

But the question remains—how “new” are these

new European fortunes?

Detailed analysis of the 56 newcomer fortunes from

Western Europe shows that few of them have been

started recently, are fi rst generation, result from new

industries such as technology or, in the case of some for-

tunes in emerging Europe, are free of ties to previously

state-owned assets. While the lack of these attributes

is not a negative per se, they do point to the fact that

business is done more or less the way it has always been

done, with relatively little dynamic change.

Among the newest fortunes created in Western

Europe, just under half are actually fi rst generation. The

majority of the fortunes that are new to the Billionaires

list were started a couple of generations ago, and the

new additions to the list are family members achiev-

ing billionaire status based on these older businesses.

In some cases, this is the fi rst time that the holdings

of some very old businesses are becoming public. For

example, France’s Nicolas Puech, an eighth-generation

descendant of Thierry Hermès, founder of Hermès,

joined the Hermès supervisory board in 2012, which

resulted in the company’s making public Puech’s hold-

ing of 6 million shares in its annual report.

Among some of the truly “new” Western European

billionaires is Claude Dauphin, chairman of commodi-

ties trader Trafi gura Beheer BV. It is also interesting

that many of these new billionaire fortunes, such as

those of Domenico Dolce and Stefano Gabbana, the

founders of Dolce & Gabbana, or Renzo Rosso, the

founder of Diesel, are in fashion, a traditional area of

European strength.

The majority of new fortunes from emerging

Europe, which are mostly from Russia and Turkey, are

fi rst generation. Some of them, however, still hark back

to the era of privatization of state assets. One outstand-

ing example of a new billionaire who made his fortune

independently is Russia’s Arkady Volozh, founder of

search engine Yandex, Russia’s Google. Another exam-

ple, in Turkey, is that of Hamdi Ulukaya, the founder

of Chobani Inc., the maker of Chobani Greek yogurt.

European families have mastered the art of keeping

successful companies going for generations, and much

of the newest crop of fortunes from the region shows

that this phenomenon goes on. But does Western

Europe also need another type of entrepreneur—one

independent of family ties and going beyond the tra-

ditional area of being the world’s tastemaker? Will

emerging Europe continue to generate momentum

once the wave of fortunes based on post-privatization

deals has played out?

A LOOK INTO THE FUTURE Where is the momentum in the world in terms of wealth creation? Forbes Insights analyzed

the newcomers to the Forbes Billionaires lists over two years (2012 and 2013). In all, 336 new

billionaires joined the list.

Figure 12. Where have most of the newest fortunes been created?

The Americas

Americas (without U.S) U.S.

Asia-Pacific

Europe

Western Europe Emerging Europe

MENA

17% 18%

34%

26%

17% 9%

5%

35%


EXPERTS

Jennifer Clark, author, Mondo Agnelli: FIAT, Chrysler and the Power of Dynasty, John Wiley & Sons, 2012

Burcak Guven, editor, Forbes Turkey

Adriana Halpert, former editor in chief, Forbes Romania

Maxim Kashulinsky, CEO, Slon.ru, Russia

Luisa Kroll, senior editor (wealth), Forbes magazine

Caleb Melby, Forbes wealth analyst

Claire O’Connor, staff writer, Forbes magazine

Tatiana Serafi n, Forbes wealth analyst

Jacek Pochlopien, deputy editor, Forbes Poland

Katya Soldak, editorial director international editions, Forbes

Andrew Tanner, fellow, department of government, Harvard University

Christina Von Zeppelin, wealth analyst

METHODOLOGY The information in this study is based on an exclusive analysis of ultra high net worth

individuals in Europe conducted by Forbes Insights, as well as interviews with European

industrialists and experts on European wealth creation. The analysis involved the study

of Forbes Billionaires data collected over the last 25 years. Also analyzed was data from

the Rich Lists created by Forbes Russia, Forbes Ukraine, Forbes Poland, Forbes Romania,

Forbes Czech Republic and Forbes Turkey.


Figure 13. Average fortune size growth over the last 25 years

REGION Average Average Percentage fortune size fortune size increase in 1989 (bil) in 2013 (bil)

The Americas (excl. U.S.) $2.3 $4.4 91%

Asia-Pacific $2.1 $3.0 43%

Europe $1.6 $4.0 150%

Middle East & Africa $1.3 $3.4 162%

U.S. $1.8 $4.2 133%

Figure 14. How many European fortunes now come from emerging Europe, in terms of number of fortunes, aggregate fortune size and average fortune size (in absolute terms and percentage-wise)?

COUNTRY Number of fortunes, Aggregate Average and share of wealth (bil) and fortune European fortunes share of Europe size (bil)

Czech Republic 4 (1%) $15 (1%) $3.7

Georgia 1 (0.2%) $5.3 (3%) $5.3

Poland 4 (1%) $9.8 (0.6%) $2.5

Romania 1 (0.2%) $1.1 (0.06%) $ 1 .1

Russia 110 (27%) $427 (27%) $3.9

Turkey 43 (11%) $74 (5%) $1.7

Ukraine 10 (2%) $32 (2%) $3.2

APPENDIX

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Brenna SnidermanSENIOR DIRECTOR

Kasia MorenoEDITORIAL DIRECTOR & REPORT AUTHOR

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Matthew MuszalaMANAGER

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Chandni VyasRESEARCH ANALYST

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BEHIND THE STAYING POWER OF WEALTH CREATION IN …images.forbes.com/forbesinsights/...Wealth_Creation...of billionaires, to 29%, and in its share of wealth, to 30% (Fig. 2). Europe