When he was in his late 20s, Ernesto Bertarelli had the world at his feet. A passionate yachtsman, he was handsome and wealthy, on his way to getting a Harvard M.B.A., and his girlfriend was a former beauty queen. But when his father Fabio fell sick with cancer, Ernesto had to grow up fast. In 1996 he took over Serono, a fertility-drug company Fabio had built up after inheriting it from his father. If anybody inside or outside the Geneva-based company had doubts about the succession, those doubts quickly disappeared. Under the younger Bertarelli's leadership, Serono has shifted its focus from pharmaceuticals to biotechnology and almost doubled its revenues to $1.5 billion in 2002, making it the world's third largest biotech company after Amgen and Genentech. "My father created a platform, and I launched myself from it," says Bertarelli, now 37. The stake he holds together with his mother and sister is worth about $4.4 billion, placing the Bertarellis among Europe's wealthiest families--and providing Ernesto with more than enough to fund his sailing ambitions. Just last month, he and his crew won their sport's greatest prize, the America's Cup.
There's a changing of the guard in European family business. A new generation is taking charge of many of these dynasties--and of Europe's economy. Like Ernesto Bertarelli, many of the heirs are better educated and more international in their outlook than their parents were, and they are leading their firms in new directions. The Barillas of Italy have built a pasta plant in Ames, Iowa, and recently bought a German bread company. The Ottos of Germany (Eddie Bauer, Crate & Barrel) are investing heavily in e-commerce. France's Lagardere family is becoming an international media heavyweight.
Such wealthy clans wield outsize influence in Europe, because of family tradition and because public shareholding is less well established there than in the U.S. About 85% of companies in the European Union are family run, and families have controlling or substantial stakes in many of the biggest firms, from BMW to L'Oreal. A study by Merrill Lynch and Cap Gemini Ernst & Young estimates that 2.5 million Europeans had financial assets of more than $1 million in 2001, compared with 2.2 million North Americans. There are more American billionaires than European ones, but in a comparison of the wealthiest people on both sides of the Atlantic, Cap Gemini found that 37% of those in Europe had inherited money, compared with 21% of the Americans.
Most European family firms are closely held and reluctant to disclose more than the basic financial information required by regulators. But in France, many of the biggest family companies are publicly listed, thanks to securities laws that let such companies leverage a substantial part of their assets on the stock market while still maintaining control. Of the 250 largest firms whose shares trade on the Paris stock exchange, 57% were family controlled in 1998 (the latest year for which figures are available), up from 48% five years earlier, according to a study by the Insead business school. By comparison, about 40% of the firms in the S&P 500 index in the U.S. are family controlled.