Over the next decade, the largest fortunes in Latin America will be passed on to a younger generation. The transition will transform the way in which business is run in the region. Who will be the successors? And, how will the new leaders differ from their forefathers?
Mexico's Carlos Slim, the world's richest man, is 73 and will one day inevitably pass control of his business empire to younger men. His sons, Carlos, Marco Antonio and Patrick, already manage parts of it.
In Argentina, the country's third richest man, Gregorio Perez Companc, is in his late seventies and reported to be in frail health. In recent years, he has gifted parts of his energy and agriculture conglomerate to his wife and seven children.
Colombia's richest man, Luis Carlos Sarmiento, turned 80 this year and is handing the reins of the family-owned banking conglomerate, Grupo Aval, to his eldest son, Luis Carlos Jr.
The upper echelons of the Brazilian business world are packed with septuagenarians. The country's richest man (according to Forbes) is Jorge Paulo Lemann, who holds a controlling stake in the world's largest beer company, Anheuser-Busch. He is 73.
Brazil's second-richest man, Joseph Safra of the Saffa banking and investment group, is also in his seventies. Retail magnate Abilio dos Santos Diniz is 76. And the granddaddy of them all, Aloysio de Andrade Faria, is in his nineties. Listed by Forbes as Brazil's 15th richest man, he is mostly retired these days, having helped build one of the nation's largest banking empires.
Over the next decade or so, these men, and many like them, will pass the baton of power to a younger generation. Who will they choose as their successors? How smooth will the transition be? And how will the new, younger men--and increasingly women--differ from their forefathers? The answers to these questions will help shape the future of business in Latin America for years to come.
"We're in the middle of a big generational transition," says John Davis, a professor at Harvard and chairman of Cambridge Advisors to Family Enterprise, a U.S.-based consultancy that has advised scores of family-owned Latin American companies on their succession plans. "Hundreds of thousands of companies are transitioning as we speak, or at least they should be."
Many business leaders in the region are already addressing these issues. Last year, Alair Martins, founder of Brazilian wholesaler Grupo Martins, signed an agreement to pass control of his company to his three sons. When he did, he said a weight was lifted from his shoulders. "I lost many nights of sleep over this," Martins told Brazilian business newspaper Valor Economico. "Over the last four of five years I've been thinking about it more and more. I'm already 78, I'm healthy and I love what I do, but I have to be realistic. I'm not going to be here forever."
Others are less well prepared. A survey by accountancy firm Price WaterhouseCoopers in 2010 showed that 55 percent of Brazilian companies had a plan in place for dealing with a succession crisis, such as the sudden resignation or death of a key manager, for example. Only 12 percent, however, had such a plan for all senior roles.
The survey found that 36 percent of family-owned businesses in emerging markets, including Latin America, expect a leadership transition within the next five years. More than half of the Brazilian business leaders interviewed acknowledged that their families sometimes quarreled about the future...