GA Trade July-Aug 2014 - page 7

BASF Boosts Research
Spending in2014Adding
Labs inU.S., Asia
BASF SE, theworld’s biggest chemical
maker, plans to increase spending on
research and development this year
and is adding six laboratories inAsia
and the U.S. Half of the research
activities at Ludwigshafen, Germany-
basedBASFwill take place outside
Europe by 2020, up from 28 percent
now, boardmember Andreas Krei-
meyer said at a press conference at
the company’s headquarters. It spent
1.8 billion euros ($2.5 billion) on
research last year, he said.
German-ownedMankiewicz
Coatings Expanding
CharlestonOperations
AGermanmaker of specialty paints
and other high-end industrial
coatings is expanding, four years after
setting up a small operation in
Charleston. The $15million invest-
ment byMankiewicz Coatings LLC is
expected to be completed in the first
quarter of 2015, said Peter Dietz,
managing director.
E C O N O M I S T ’ S C O R N E R
A
pparently, wealth has a tendency
to be fleeting. The fortunes of
themoneyed have on average lasted
three generations: The first generation
makes it, the second lives on it and
the third one loses it. In order to
ensurewealth preservation, affluent
families increasingly turn to profes-
sionallymanaged family offices.
What counts aswealthy these days?
Someonewith upwards of $30million
in liquid net worth is considered an
ultra-high net worth individual.
Remarkably, in the U.S., 5,000
households have at least $100million
in investible assets and 442 people are
billionaires. Often times such fortunes
result from the building and, some-
times selling, of companies. In the
course of the financial crisis, many
families have become disenchanted
with banks and, therefore, have
moved their assets to family offices.
Single-family officesmanage the
assets of one family, whereasmulti-
family officesmanage the assets of
several families. The concept has
evolved over a long time. Business
tycoon JohnD. Rockefeller, for
instance, set up his family office in the
19th century. Today, people like Bill
Gates,Michael Bloomberg andOprah
Winfrey all have family offices. Hedge
fund billionaires George Soros,
StanleyDruckenmiller and Steve
Cohen recently converted their funds
into family offices to escape increas-
ingly strict financial regulation. Since
the costs of running even a relatively
small family office can easily exceed
$1million per year, as a rule of thumb
it is estimated that operating one’s
own single family office is onlyworth
the expenditure if liquid assets exceed
$500million.Multi-family offices are
sometimes started by a familywhich
later invites other families to join.
Today, many commercial financial
firms offermulti-family office
services. Advantages of family offices
include control, trust, privacy and cost
efficiencies. In addition tomoney
management, they typically offer
accounting, tax, governance and
estate planning services.
Banks, which have traditionally
tended to the needs of the prosperous,
and family offices now essentially
compete for the same clients. As
wealth at the top end continues to
grow globally, they court new
millionaires in emergingmarkets, in
the tech sector and those stemming
from IPOs andM&A transactions. In
recent years, there has been a strong
trend of single-family offices teaming
up to co-invest directly into deals,
primarily in the venture capital and
private equity space. That enables
them to share expertise and circum-
vent the fees that financial firms
charge. If the families are as success-
ful in themanagement of theirmoney
as they have been in running their
businesses, they have nothingmuch
toworry about.
n
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Sandra Navidi
Chief ExcutiveOfficer
BeyondGlobal, LLC
MoreMoney,MoreWorries –How
theWealthyPreserve their Fortunes
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