Succession, the challenge for Latin America’s big business families

By Blake Schmidt

Agustín Coppel Gómez was born into one of Mexico’s biggest retail fortunes, but he is not alone.

He and his three brothers are part of the third generation of 31 descendants of the family’s late patriarch, Enrique Coppel Tamayo.

He founded the business in 1941 and later introduced a credit card to give his working-class customers access to buy clothes and furniture in his stores.

Agustin is one of the few of his cohort to have worked in the family business, Grupo Coppel, most recently in its banking unit.

The fourth generation, consisting of about 70 members, is even less involved, as many are engaged in their own businesses or philanthropic initiatives.

“It’s a challenge to work in the company, a challenge to be accountable to family members,” Agustin, 33, said in a recent interview in Mexico City.

“If you want to do it, you’re welcome, but it will take time to move up and learn.”

Family dynasties are the backbone of the Latin American economy, accounting for 75% of the region’s businesses valued at US$1 billion or more and driving 60% of the region’s gross national product, equivalent to some US$3.2 trillion.

However, when it comes to putting their succession plans into action, they are notably less adept.

Nearly two-thirds of the companies were liquidated or sold by their founders.

Less than 15% of the company is run by a third-generation family member, according to a report by the French business school INSEAD.

Many factors that make them so successful – concentrated ownership, streamlined decision-making, and the ability to leverage family business and political connections – are not easily passed on to new owners.

In the coming years, succession will become increasingly urgent.

Credit Suisse Group AG predicts that Latin American wealth will grow to a record US$18 trillion in 2026, up from US$12.6 trillion in 2021, becoming the fastest-growing region for new millionaires.

One advantage for the current generation is the ability to draw on a broader set of resources to learn how to manage these transitions, said Lisa Moller, former head of family business and private client services at Ernst & Young.

“Family business governance is struggling worldwide, and there are avenues to get help in many places,” she said.

“Also, awareness of this service for family businesses is growing.”

“This does not mean that family businesses are no longer struggling. It still takes a lot of work to succeed.”

The topic gained prominence last week at the Latam Family Office Investment Summit, held in Mexico City, particularly after the death of Mario Lopez Estrada, Guatemala’s first billionaire, occurred on the first day of the event.

Lopez, who was 84, sold his telecommunications business to Millicom International Cellular SA for US$2.2 billion in 2021 to focus on Grupo Onyx, where his son is CEO and two daughters are board members.

Many of the attendees at the summit, organized by Alea Global, a Kuwaiti business conglomerate, were second or third-generation heirs, like Coppel.

Among them were:

• Gonzalo Hevia Bailleres, scion of a multibillion-dollar Mexican mining fortune;
• Bettina Bulgheroni, wife of Alejandro Bulgheroni, an Argentine billionaire who runs Bridas, the energy company founded by her father,
• and Alejandro Botran, a third-generation family member who runs Guatemala’s national liquor company.

Agustín Coppel says they have tried to circumvent potential problems arising from succession by organizing a family council chaired by his cousin Susana, one of the few women in the family to hold a management position.

“You have to study a lot, read books and talk to professionals,” Coppel, who has an MBA from the University of California, said in an interview on the summit’s sidelines.

“We are actively working to have a clearer message for the rest of the family now that we are going through the fourth generation.”

After the death of Grupo Coppel’s founder in 2007, his five children took over the company, and Agustín’s father – Agustín Coppel Luken – became CEO the following year.

The family’s retail empire, based in the state of Sinaloa, now has some US$10 billion in annual revenues, making it one of the largest and fastest-growing retailers in the region, according to a Deloitte report this year.

According to the Bloomberg Billionaires Index, the family has a combined fortune of US$15.5 billion.

However, this has not stopped the third-generation offspring from creating their own companies.

Agustin Coppel Luken’s branch has its own, called Talipot, which recently spun off a San Diego-based investment firm, 1200VC.

Led by its CEO, Adriana Tortajada, 1200VC is raising its first US$150 million fund this year with plans to invest in artificial intelligence, financial technology, and climate technology.

Other families are pursuing similar strategies.

The Botráns’ traditional business is liquor and sugar production-they distill ultra-premium Zacapa rum in a joint venture with Diageo Plc – but Alejandro, a third-generation heir, is looking for opportunities outside the core business.

Alejandro, 54, built and sold a television channel to Ricardo Salinas’ TV Azteca network.

He said he was also an investor in hotel group Selina, which recently debuted on the stock market through a US$1.2 billion deal with a special acquisition partnership.

He created the startup accelerator, Aceleradora Danta y Fábrica de Unicornios, to secure new growth areas for his family, which in recent years has sold assets while dealing with “complicated” family planning issues, he said.

He said the third generation of his family has about 30 members, and the fourth could have as many as 100.

“What I’ve decided is that we have to play in this game of unicorns,” Botran said.

With information from Bloomberg