Porsche Family Feud

Aug 9

Family businesses are not meant to last. At least that’s the conclusion the Porsche family came to in 1972.

The iconic company, founded in 1931 by Ferdinand Porsche, has a controversial past. Ferdinand was known as Hitler’s preferred engineer, and later went to jail for war crimes after WWII.

His son, Ferry, and his daughter, Louise, took over the business while their father was in prison and the intense competition for control of the business soon followed - with Louise’s side of the family (the Piech’s) forming a clear divide.

One example of the contrast between the two siblings could be found in their approach to educating the next generation to run the business. Ferry sent his children to Waldorf schools that focused on creativity whereas Louise took the exact opposite approach and sent her children to militaristic boarding schools.

When Ferdinand (the founder) died in 1951, he gave each child partial ownership in the company. But by the time the third generation (the cousins) began working within the company, things became unsustainable. The friction between the family units reached a head in the early 1970s.

After a failed family meeting, one of Louise’s sons tried to sell his portion of shares in the company to a group of Arab investors. The family quickly raised money to block the deal, but at that point it was clear that this couldn’t go on any further. In 1972, the family agreed that none of them would continue working at Porsche.

This, of course, didn’t really end the tension because Louise’s son, also named Ferdinand, got around that agreement by eventually becoming the CEO of VW, and took over Porsche for VW in 2009 after the financial crises. To make matters worse, he stole the heart of Marlene Porsche, his cousin’s wife(!) prior to the takeover - Marlene had also gotten some family shares of Porsche as a result of the divorce.

Now that the 3rd generation’s reign is coming to an end, the already fragmented ownership will most likely become negligible as ownership passes onward - meaning no particular heir is going to have the same control or company direction as the younger Ferdinand did via VW apart from being members of the board (if that).

To no one’s surprise, the next generation (perhaps after seeing their parents and grandparents fighting for decades) has distanced themselves from direct involvement in the company. Peter Porsche even wrote a book titled, “There’s More to Life Than Building Cars.”

Regardless of your family’s situation, one thing is clear - if you want to keep the peace among family members, get as much in writing as possible while you are living. That’s what an estate plan is all about.