Mukesh Ambani’s Succession Plans and Why They Matter To All of us

Last week, there were news reports that Asia’s richest businessperson, Mukesh Ambani ha been drawing up succession plans detailing how his immense wealth would be divided among his wife and three children. These plans, reported by several news portals indicated that Ambani plans to follow the model of inheritance of wealth in family businesses that Walmart’s Walton family is known for. Among other things, Ambani’s plans include placement of his children on the boards of the many businesses in the sprawling Reliance empire and drawing up a “clear” succession plan, leaving no room for ambiguity, as to who gets what after he retires or after he is no more. In other words, the whole idea is to ensure a “smooth” transition to the Next Gen of the Ambani clan so that there are no unseemly squabbles and internecine family fights over his wealth.

By drawing up succession plans, Mukesh Ambani, seems to have learnt his lessons from what happened after the patriarch, Dhirubhai Ambani died in estate, or without leaving a will. What followed was a very public and ugly spat between the Ambani brothers, Mukesh and Anil, over the division of assets, which ultimately needed intervention from not only their mother, Kokilaben, but also leading lights of India Inc. as well as a “nudge” from then Prime Minister, Manmohan Singh, to “resolve” the disputes between them in the larger interests of the business community as well as the nation. Indeed, when someone as wealthy as the Ambanis fight over the inherited wealth, broader repercussions on the economy and business of the country ensue, and hence, the reported succession plans matter to all of us as well.

If I remember correctly, there were some reports at the time of Dhirubhai Ambani’s death that spoke of the “puzzlement” of industry figures as to how a person as astute as him and someone “who could size up situations and people” died without leaving a will. Some wags even suggested that this was “deliberate” so as to not spark a more uglier battle for control, thereby preserving the wealth. Whatever be the reasons, the rather bitter spats between the Ambani brothers left their scars on India Inc. as well as the brothers themselves. Indeed, seen in this context, Mukesh Ambani’s succession plans should be welcomed by all and sundry, though the temptation for schadenfreude and amusement at uber rich Oligarchs battling it out is irresistible. In other words, while feuding family businesses make for good entertainment and TRPs (Television Rating Points), they have broader impacts on the economy and the country as well.

Having said that, Mukesh Ambani’s succession plans also bring to the fore as to how much say professional managers have in running family businesses. In this context, it is laudable that these plans, if they fructify, seem to give professionals a larger say in the day to day management of the Reliance Empire. Moreover, Ambani’s idea is to gradually “ease off” from the governance of the businesses and also ensure that his children are placed on the boards of the businesses, leaving most of the decision making to lieutenants. However, this is not totally hands off, as significant executive power would be vested with them, thereby perpetuating the command and control structures that have been in place for some time now.

On the other hand, the reported succession plans also indicate a rather shrewd move to keep the Ambani children from squabbling and not going the way of their uncle, Anil Ambani, who has burnt most of his wealth away, to the point of almost declaring bankruptcy, till he was “rescued” by the Rafale deal. Indeed, considering that over the decades, the Ambanis have also been on the “right side” of whichever dispensation was in power, it is almost certain that they are Too Big To Fail and hence, at least from this purely cynical viewpoint, the succession plans do matter to all of us. It is for this reason alone that there needs to be more openness and media coverage of this topic as any potential conflict in the humongous Reliance empire is bound to have repercussions on all of us.

Last, while all this can be dismissed as a family affair and not worthy of serious discussion, it needs to be remembered that India Inc. is notable for a string of business battles in family owned firms that did have knock on effects on everything from stock prices to mega deals, some done and others undone. Just remember what happened to the Tata and the Singhania empires as well as the Ranbaxy firms in addition to a slew of other family owned conglomerates. Moreover, Mukesh Ambani is not the only ageing patriarch in not only India but the entire Asia, and hence, his plans can very well become the template for others to follow. Without going into the byzantine modes of control that he is planning, it should be the case that the eventual transfer of control be as friction free as possible so that not only the Ambanis, but India Inc. and the broader economy does not take a hit.

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