How to run a family office like an Agnelli


John Elkann, head of the Agnelli dynasty that owns shares in Stellantis, Ferrari and The Economist, has built a reputation as a model for how family businesses should manage succession and governance. But a month of scandal involving relatives is a reminder of how blood ties can still be wildly unsettling even in the most professional of hereditary businesses.

Elkann is the anointed heir to the Agnelli automotive empire, which was founded by his great-great-grandfather in 1899; he is also the CEO of Exor, the family’s mutual fund and holding company for a long list of companies. The past few weeks have been tumultuous. On November 7, a preliminary hearing in the clan’s hometown of Turin saw a fresh exchange of animosity in a 20-year inheritance battle between Elkann and his estranged mother, Margherita Agnelli, daughter of Gianni Agnelli. The legendary Fiat magnate, who died in 2003, had designated Elkann as his eventual successor in 1997.

At the heart of the hearing is whether Elkann’s mother can get their dispute heard in Turin, and therefore under Italian law, even as a trial is already underway in Switzerland. Her ultimate goal is to take advantage of the more generous Italian inheritance laws that could earn her more influence on Exor. Those close to Elkann say they consider it highly unlikely that anything will change, but admit surprise at the opening of another front in the dynastic struggle.

Within days, Elkann had another meltdown involving a family member. His uncle Andrea Agnelli resigned as Juventus FC president, along with the rest of the board, after Italian prosecutors and regulators alleged accounting irregularities. Zio Andrea had represented Exor, and therefore the family, as president for 12 years. The soccer club is worth just 2% of the conglomerate’s net asset value of $33 billion, but the accounting controversy cast a shadow over the entire business. Elkann stepped in and said he would install a new Juventus board filled with “senior technical and legal figures”. He said that he is confident that the previous board always acted correctly.

Tolstoy said in Anna Karenina that “happy families are all the same; Every unhappy family is unhappy in its own way. And the House of Agnelli has had epic problems. Elkann has repeatedly faced family crises, beginning with the near-bankruptcy of Fiat after the death of his grandfather, his own rise to head the empire after the suicide of one uncle and the death of another from cancer, the legal dispute of his mother, alleged substance abuse.

The dynastic drama reinforces the importance of competent outside managers in family businesses, rather than installing cousins ​​in the corner offices of subsidiaries. In fact, Juventus was the last outpost still run by an Agnelli, aside from Exor himself. On November 1, as speculation about the future of the football club swirled, Elkann announced the promotion of more senior independent managers from outside the Exor business. People close to him say the timing was a coincidence. Still, he underscored his decade-long quest to separate Agnelli’s family members and friends from the operations.

In an interview a few years ago, Elkann told me that the strength of family businesses was the inherited ability of the owners to focus on the long term, being risk averse, loyal to employees and attentive to stakeholders. It is a counterpoint to shareholder capitalism that is now lacking.

However, Elkann’s latest conclusion about dynastic control is old. In a recent Credit Suisse study of hundreds of family offices around the world, Felix Baumgartner, head of premium clients in Switzerland, warned that no organization could overcome the inherent family conflicts. “Single-family offices have yet to find a solution to the age-old challenge of managing generational conflict,” he says.

That’s something Elkann is surely aware of as he struggles with his mother and deals with his uncle’s issues. Family can be your strength; it can also be your downfall.

More from Bloomberg’s opinion:

Can Meloni learn from Berlusconi’s failures?: Rachel Sanderson

Five Rules for Family Businesses to Thrive: Adrian Wooldridge

The UK already has a nasty wealth tax: Merryn Somerset Webb

This column does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.

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