Long Live The Dynasties

Back in the early 1990s, it almost looked as if two of the great industrial dynasties of Europe, Sweden's Wallenbergs and Italy's Agnellis, had come to the end of the line. Overburdened by debt, problem-packed Wallenberg companies such as Saab were draining away resources from the rest of the group. In Italy, the Agnellis were forced in 1993 to cede partial control of their loss-plagued industrial crown jewel, auto giant Fiat.

But as the decade draws to a close, both the Wallenbergs and the Agnellis are looking more vigorous and deal-hungry than ever. That's partially due to the influx of top-flight, professional management, from Fiat CEO Paolo Cantarella and IFIL managing director Gabriele Galateri in Italy to the former ABB CEO Percy Barnevik, who is overseeing the Wallenberg empire. The rebirth of the clans is also due to the quick globalization of their business empires. Witness the pioneering activities of ABB, Ericsson, and Fiat in emerging markets like China, Brazil, Argentina, and India.

The combination of a family firm buttressed by public equity, professional management and a global reach is turning out to be a peculiarly successful European business model. "In the U.S. the idea is that you make money with an IPO" and get out, says Ludo van der Heyden of France's INSEAD management school. In Europe, he says, there is more of an accent on preserving opportunities for succeeding generations. Successful dynasties like the Agnellis and Wallenbergs, says van der Heyden, "go out of a business, not out of business." Perhaps, but only one in 10 industrial clans in Europe make it to the third generation before leaving the family business. So far, the Wallenbergs and Agnellis have beaten the odds.