New Fortune | Athos FO:Decision of German Pharmaceutical Tycoon after the sale of family business
Global Family Business Research Center

Facing challenges of inter-generational inheritance, the pressure of transformation and upgrading overlaid with external factors, more than half of China's private enterprises may choose to sell their controlling stakes in the next 10-20 years according to the experience. Can these first- and second-generation entrepreneurs live in style and be hands-off leaders of investment? Many real-life cases at home and abroad show that the weakness of human nature and social relationships all insinuate some human limitation, and that without the will and ability to take responsibility for oneself, he may lose everything.
 
Andreas Strüngmann and Thomas Strüngmann, twin brothers of the G2 in German Struengmann family, who come a cropper in this issue, sold their HEXAL Pharmaceutical to Novartis Pharmaceutical in 2005, and got $8.3 billion in cash, but they were betrayed by banks and startups in their investment. Recalling their painful experience, the two brothers flew millions of kilometres around the world on study tours and eventually chose to set up a single family office, Athos FO.
 
In 2015, the 65-year-old Struengmann brothers tied for the 534th place on Forbes' global rich list with US$ 3.3 billion in net assets, and planned to pass on FO platform to the next generation in 10 years. After 7 years' of operations, the family offices of the two brothers have achieved great success, and their wealth has greatly increased. In 2022, they tied for the 158th place in Forbes' global rich list with USD 11.9 billion respectively.
 
Source: New Fortune, August 2015
Author:
Gao Hao (Director, Global Family Business Research Centre, PBC School of Finance, Tsinghua University)
Liu Chung Hsing (Founder of Sino Suisse Capital and previously Head of UBS Ultra High Net Worth Division Greater China)
Jiawei Ye (Head of Philanthropic Foundations and Fundraising, World Economic Forum)

 
The tide of inter-generational inheritance in Chinese private enterprises is raging with great momentum. However, from worldwide experience and the current situation of private enterprises in China, inter-generational inheritance success is very scarce. Since most private enterprises are unable to achieve inheritance, what is the way forward for entrepreneurs?
 
More than half of private entrepreneurs may eventually have to sell their controlling stake in an industrial enterprise in the next 10-20 years in analysis with field experience. This is because most private companies are facing huge internal and external challenges: externally, most of them is facing further overcapacity situation. Market competition between every country has become increasingly white-hot, disruptive technologies and models are emerging, and industrial upgrading and digitisation are imminent; Internally, most successors of the next generation are not interested in traditional industries, and have no ability to control huge industrial enterprises.
 
The sale of a long-running business will bring a series of brand-new challenges to the family. On the one hand, the family will be left with only cash after the sale of the enterprise, the sense of achievement in running the business will be gone and the former social status will be difficult to maintain, leaving a generation of entrepreneurs who have lost their spiritual support feeling empty and disoriented; On the other hand, the large amount of cash brought by the sale of enterprises also brings more investment opportunities and potential traps to families. Entrepreneurs are unparalleled in managing industrial enterprises, but they are novices in financial investment. How can they take the first step and not seduced by the glitz and money of investment?
 
In May 2015, the research group of family office of Tsinghua University PBC School of Finance went to Munich, Germany, and conducted an in-depth interview and research on Thomas Strüngmann, the European pharmaceutical giant, and his family office. Struengmann second-generation (G2) twin brothers founded the German Hexal Pharmaceutical Group, which once ranked among the largest generic pharmaceutical companies in the world. However, Struengmann family faced the same challenges as Chinese private enterprises: enterprise inheritance and successor training, as well as increasingly fierce competition in the pharmaceutical industry.

 
 

Gao Hao, one of the authors of this article, went to Munich, Germany in 2015 to interview Thomas Strüngmann, the 2nd generation head of Struengmann family.

In 2005, the Struengmann family sold Hexal Pharmaceutical to Novartis, one of the world's three largest pharmaceutical giants (founded in 1758, with a sales volume of 57.9 billion USD in 2013), and got an marvellous cash of about 8.3 billion USD. After the sale of the enterprise, the second generation of the family founded Athos Family Office (hereinafter referred to as "Athos FO") instead of enjoying retirement. The vision of the two brothers to set up a family office was to realize the entrepreneurial spirit and the long-term inheritance of family fortune.
 
In 2015, the 65-year-old brothers had net assets of $3.3 billion respectively, ranking 534th in the 2015 Forbes Global Rich List. After seven years of operation, the family office has been a great success, and the wealth of the two brothers has greatly increased. In 2022, they tied for the 158th place in Forbes' global rich list with USD 11.9 billion respectively.
 
In the decade 2005-2015, Struengmann's journey to the family office was not all plain sailing, but took many detours and gained never-forgotten lessons. After a hundred twists and turns, the humility and introspection of the G2 of entrepreneurs eventually turned the tide against them and now reaps the rewards. The journey of the Struengmann brothers after the sale of their family business, as well as the setbacks, puzzles and cutting-edge practices encountered in the process of founding Athos FO, will bring many beneficial inspirations to Chinese private entrepreneurs who have already sold or are preparing to sell their businesses.

Twin Successors: The First Inheritance of Pharmaceutical Family