The management of major conglomerates worldwide is gradually becoming more normalized, even without direct involvement from their entrepreneurial founders. Companies like Apple, Microsoft, and Amazon do not have the offspring of their original founders taking over leadership roles. This shift reassures investors that professional managers, based solely on their abilities, will eventually take control on behalf of shareholders as the founders’ influence diminishes.
On the contrary, Arnault seems to be moving in the opposite direction by replacing long-serving senior executives with his children in key positions. He seems to be waiting to see which of his children has the necessary skills and ambition to succeed him when he eventually steps down.
While many entrepreneurs have placed their children in senior positions, such as the Murdochs, the Arnault family has five children competing for control, which is unprecedented and could lead to potential conflict. It is unlikely that this scenario will end well.
There is too much at risk for anything to go wrong. Regulators in Brussels and Paris are preoccupied with other issues, but they could potentially face a problem closer to home if Arnault’s family succession plan fails.
Arnault’s actions seem to suggest that he is turning LVMH into a family-run business. The luxury goods market is already volatile, especially with slowing demand in China as demonstrated by the decline in shares of the Gucci owner, Kering, last week.
In reality, this situation poses a significant risk to the French stock market and the broader European economy. If Arnault’s succession plan fails, it will not only impact one family fortune but could have far-reaching consequences.
