MAGGIE PAGANO: How will LVMH, L’Oreal and Inditex manage succession planning?

This has been a tough old year for billionaires. As the latest Forbes list of the top 25 richest people in the world shows, their collective fortune is down by $200billion to $2.1trillion, mainly due to sharp falls in big tech firms such as Amazon and Tesla.

What the Forbes World’s Billionaires list of the planet’s 2,640 billionaires also shows is a fascinating shift over the last year in how they made their money.

Of the 25, those making their riches from fashion and retail rose to seven while those making their fortune from technology was eight. Americans still top the ranks, taking 17 of the 25 top spots, but next in line are French and Indians.

By far the world’s wealthiest person is Bernard Arnault whose shares in LVMH, his French luxury goods empire, are at high, making his fortune worth $200billion-plus

By far the world’s wealthiest person is Bernard Arnault whose shares in LVMH, his French luxury goods empire, are at high, making his fortune worth $200billion-plus. 

He becomes only the third person in history to be worth so much, after Amazon’s Jeff Bezos and Tesla’s Elon Musk.

The other French billionaire to be included in the top 25, in 11th place, is the L’Oreal heiress Françoise Bettencourt Meyers, who is still the world’s richest woman with a net worth of $80billion. 

Her cosmetics group, L’Oreal, which has just shelled out £2billion to buy Aesop, Australia’s luxury beauty brand, just keeps on growing with the shares up by 12 per cent over the last year.

Together these two French giants are worth $694billion and dominate the Paris Bourse. They are the main factor as to why the French stock market has been beating the London market by value.

Yet this is a misleading comparison – however much the French may enjoy pipping the Brits to the post – because it measures firms which have only a primary listing whereas London has far more dual listings.

In 13th position is Amancio Ortega, founder of Inditex, the Spanish fashion giant which includes the Zara and Massimo Dutti brands.

His fortune has rocketed over the last year by £14.5billion to £61.9billion as Inditex shares soared by 39 per cent.

What these rankings illustrate is that there is real value in making great products that consumers want, whether it’s Zara’s cheap and cheerful fashion on the High Street or Tiffany & Co on Old Bond Street.

And they are all products which appeal to customers around the world, particularly in the developing countries in the East where the middle-classes are growing fast.

On the flip side, the rankings show how vulnerable tech giants like Amazon, Tesla and, indeed, Facebook are proving to be when buffeted by the vagaries of the market, and how they all over-expanded during the pandemic years.

All eyes now are on how these three giant European companies manage succession planning. As the hit TV series Succession shows, the squabbling among rival children jostling for supremacy is not only unsightly but unsettling for business.

So far, both Inditex and LVMH appear to be taking sensible steps to avoid such in-fighting. The 87-year-old Ortega has bitten the bullet, handing over the chair to his daughter, Marta Ortega, last year in a clear line of succession. To date, the young Ortega looks on a roll.

The 74-year-old Arnault has also been quick to start handing over power.

He recently reorganised the holding company, Agache, giving equal stakes to all his five children and appointing them to key roles within the business.

His eldest, Delphine, took over at Christian Dior, while his son, Antoine, heads Agache and the family fortune.

Building a vast empire is often the easiest bit. The harder part of running any dynasty is the choice of heir to take the business forward – and not mess up, as so often happens with second generations.

Rotting fish

For years the CBI has boasted that it is the voice of British business, claiming that it represents 7million workers and 190,000 firms.

It was always boastful, with the top brass making much of access to powerful ministers. Indeed, some would say power has gone to its head.

As many small firms will testify, the CBI spoke mainly for big business, often ignoring the needs and the demands of the country’s SMEs. Yet it is these 6m or so companies who need the bigger voice.

Unless the CBI can demonstrate allegations of sexual misconduct by female employees against its senior staff are wrong, its days could be numbered.

As the Chinese proverb reminds us: ‘The fish rots from the head.’ So it is with businesses and other organisations.

This post first appeared on Dailymail.co.uk