Saturday, July 12, 2014

"How To Blow $9 Billion: The Fallen Stroh Family"

Great case study in Forbes about generational wealth:

"[S]he describes one incident during her college years when she was snorting cocaine with her brothers while the rest of the family was downstairs having Christmas dinner at their Grosse Pointe Farms home."
The beer business ought to be tough to screw up. High gross profit margin - if you had a paid for plant with no debt and distribution in place how could you go out of business?

Once family members lose interest in the business, the best thing to do would be to cash out in a sale to the public or to a competitor. A passive stock and bond index portfolio will beat a business run by people who don't care.

Family members who aren't in the business and just receiving dividends should maybe have nonvoting shares. Or preferred stock.

2 comments:

James said...

Reading things like this and The Big Rich is really depressesing. No matter how much you accomplish, it can all be squandered by your heirs in a generation or two. Even if you marry the right woman, teach your children to be thrifty, etc, it could still go bad though no fault of your own.

It would be interesting to find some titled British family that's been rich for centuries and look at what they did to beat the odds.

CP said...

Entropy!