SG60: Building a 100-year family enterprise

Straits Times

a day ago

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UBS has been advising multi-generational families for more than 160 years, predating the establishment of modern family office structures.
As Singapore celebrates its 60th birthday and passes the reins to the new generation of leaders, so are many of the Singapore businesses that were founded during our early years of nation-building.
Family-owned businesses form the backbone of Singapore's and South-east Asia's economies, accounting for more than 60 per cent of the listed companies on the Singapore Exchange and 80 to 90 per cent of the large companies in South-east Asia.
Our UBS Asian Family 500 index has shown that family businesses' share price performance has consistently outperformed that of non-family businesses over the last 20 years in Asia, delivering a 212-basis-point higher return on invested capital on average over the long run, reflecting greater focus on long-term value creation.
Based on UBS analysis, 70 per cent of Asia-Pacific family-owned businesses are currently in their first and second generations, with the average age of the board members across South-east Asia family enterprises being 62, according to the 2025 EY and University of St Gallen Global Family Business Index.
According to McKinsey, an estimated US$5.8 trillion of wealth is expected to change hands by 2030 in Apac. The mindset is also evolving, as observed in our annual UBS Billionaire Ambitions Report over the past decade.
Wealthy multi-generational families have become more global with homes, families and businesses spread across different countries.
One of the greatest challenges highlighted by the billionaires is fostering in their heirs the values, education and experience required to take over the family business. At the same time, the heirs have their own aspirations and interests outside of the family business.
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Preparing for a smooth succession of the family business and wealth transition is imminent, as only 12 per cent of global family-owned enterprises make it to the third generation, according to a Gallup report.
It is a difficult conversation fraught with sensitivities and emotions, especially in an Asian society, but can be alleviated by an independent trusted facilitator.
As the business hub of South-east Asia, Singapore has been a pioneer in innovation practices for the region and can continue to be a leader in family advisory. The number of single-family offices in the Republic has quintupled in the last four years, to more than 2,000 in 2024.
Setting up a family office is just one of the pillars of creating lasting familial wealth. Financial institutions play a crucial role as an independent trusted adviser in both optimising business value and preserving families' wealth and legacy.
UBS has been advising multi-generational families for more than 160 years, predating the establishment of modern family office structures.
Institutionalisation for greater longevity
The long-term stability of Singapore to date is a result of its strong institutions, such as the Central Provident Fund. Family businesses can benefit from similar formal governance frameworks that include clear decision-making protocols which balance family influence with professional management.
The desire to retain family control among family-owned companies often stands at the core of the decision-making process and impact the willingness to take risk.
According to a research by Cucculelli, Le Breton-Miller and Miller (2016), family governance inhibits the development of new product introductions. They find that this trend is more pronounced in successor generations.
Institutionalising the family business and wealth is the key to preserving the family legacy. Effective governance structures can ensure family control while implementing merit-based leadership for the family enterprise.
An example is Walmart, owned by the world's richest family (the Waltons), which has been managed by a professional chief executive for the last 37 years.
Walmart, owned by the world's richest family (the Waltons), has been managed by a professional chief executive for the last 37 years.
PHOTO: AFP
A focus on an 'entrepreneurial model' across the business has been a consistent theme in our discussions with family CEOs, with many families intentionally inculcating that entrepreneurial spirit among the next generations.
The unanimous view among the European and American founding families in our 2023 Family 1000 Report is that the future leader of the business should be chosen based on the best fit for the company, regardless of whether the individual is a family member or not.
A framework which allows for the family members to collectively engage one another, and make decisions together, creates a pathway for the new generation to be mentored and groomed.
Family CEOs are also aware of investors' scepticism around family-run businesses and seek to implement best practices in corporate governance. This is a key area where Singapore as the leader in corporate governance can help to drive the South-east Asian region forward, especially with the growth in private markets.
Our UBS Family Advisory and Wealth Planning team works alongside our clients to help family members put together the most efficient structures to hold assets, and to embed a family governance framework into those structures with the goal of enhancing communication and transparency. The goal is to provide a compass for future decision-making in the family.
To unlock their business value, we often explore with our entrepreneur clients, as an independent adviser, their thinking behind expanding or pivoting their core family business, and potential exit options.
Navigating the transition from entrepreneur to investor is not as straightforward as it might seem, and implementing a wealth preservation strategy should not be an afterthought. Succession planning should be a long-term, planned endeavour.
Governance structures for family businesses and wealth management have improved over time.
Family offices are also becoming more professional, with 65 per cent of South-east Asian family offices having a wealth succession plan for the family members versus 36 per cent for those in North-east Asia, according to the 2025 UBS Global Family Office Report. Over half of the Apac family offices report that the next generation will join the board, primarily focusing on investment management activities.
Shaping future business leaders
In the last 20 years, UBS has trained over 1,700 next-generation wealth holders across more than 75 countries under its comprehensive range of NextGen programmes.
For example, the bank hosted the children of ultra-high-net-worth clients in Switzerland for the Global Rising Investor Programme and in Singapore for the UBS Leadership Excellence and Development Series Certification Programme.
Our programmes provide affluent families with the tools and resources they need to prepare their successors for broader responsibilities. These ensure that the next generation is well-equipped to manage their family's wealth and legacy as future leaders and stewards of financial wealth.
As our Asian clients' businesses, investments and affairs become increasingly globalised, we see a growing demand for diversification and booking centres that can help them preserve and grow their wealth.
Our family advisory team in UBS complements the Singapore government's efforts in helping our family office clients with their set-up, education and investments.
We help our clients define the strategy for the family office, set up investment processes and governance, and run curated programmes such as Family Office Dialogues, Family Office Labs and Family Office Academy.
As Singapore marks 60 years of progress, its family enterprises stand at a pivotal juncture – balancing legacy with transformation.
Building a 100-year centurion family enterprise demands more than just succession; it requires institutionalisation, governance, and a global mindset. Only then can we ensure that our legacy thrives for generations to come.