Crafting Generational Legacies 

For ultra-high-net-worth individuals (UHNWIs), wealth is more than assets—it’s a legacy. Yet, the adage “Wealth doesn’t last beyond three generations” holds true, even in Malaysia. Without proper planning, family fortunes often dissipate by the third generation. A prime example of this is the story of Batu Kawan Berhad, a company linked to the Loh family, founders of the Loh Boon Siew Group.

The Rise of the Loh Family Empire

The Loh family’s business empire began with Loh Boon Siew, known as the "Henry Ford of Malaysia" for his role in introducing Honda vehicles to the country. He built a thriving automotive business, which later diversified into plantations, property development, and manufacturing under Batu Kawan Berhad, a publicly listed company.

After Loh Boon Siew’s passing, the business was passed down to his son, Loh Cheng Yean, and later to the third generation. However, the transition was not without challenges.

Fragmentation of Shares and Governance Issues

As the business passed to the third generation, shares were divided among multiple heirs, leading to fragmentation of ownership. This dilution of control made it difficult to maintain a unified vision for the company. Family members had differing opinions on the direction of the business—some wanted to focus on the core automotive and plantation businesses, while others pushed for diversification into new sectors.

The fragmentation of shares often occurs when family businesses fail to establish clear ownership structures. In the case of the Loh family, the division of shares among siblings and cousins led to competing interests and decision-making gridlock. Without a centralised authority or a unified strategy, the company struggled to adapt to changing market conditions.

The lack of a formal family governance framework exacerbated these issues. Without clear rules or policies to guide decision-making, conflicts arose, and the company’s performance suffered. Over time, the family’s control over the business weakened, and external stakeholders gained more influence.

Lessons from the Loh Family

The Loh family’s experience highlights key reasons why wealth often fails to last beyond three generations:

1. Fragmentation of Shares: Dividing ownership among multiple heirs dilutes control, leading to decision-making gridlock and mismanagement.
2. Lack of Family Governance: Without clear rules, policies, and communication frameworks, family conflicts arise, jeopardising both wealth and relationships.
3. Failure to Adapt: Over-reliance on traditional business models without adapting to changing market conditions can lead to stagnation.

Breaking the Cycle

To avoid the fate of the Loh family, families must focus on four key areas:

1. Ownership Structures: Use tools like family trusts or holding companies to prevent share fragmentation and maintain control.
2. Family Governance: Create clear rules and communication frameworks to resolve conflicts and ensure unity.
3. Succession Planning: Plan early to identify and prepare the next generation of leaders while preserving family values.
4. Adaptability: Encourage innovation and diversification to stay competitive in a changing market.

By addressing these areas, families can protect their wealth and ensure it thrives for generations.

How Crowe Wealth Management Can Help

Crowe Wealth Management specialises in helping UHNWIs preserve and grow their legacies through tailored Family Office services. From wealth preservation and family governance to tax planning and succession strategies, Crowe provides the tools and expertise to break the “three-generation curse” and ensure your legacy endures. After all, true wealth isn’t just about what you leave behind—it’s about how it lives on.

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