Succession as Strategic Value in Investing

In May 2025, Warren Buffett announced that he would step down as CEO of Berkshire Hathaway but remain as chairman of the board. This move, although largely expected, marks an important moment in the company's history. His successor, Greg Abel, has been in the picture for years and has gradually taken on more responsibilities. What stands out is the calm with which this transition is unfolding. The stock price remained virtually unaffected. Investors responded with confidence.

Succession is often an overlooked theme in the world of investing, yet it plays a fundamental role in how companies are valued — both on the stock market and in the private sector. While companies like Berkshire Hathaway, Microsoft, and LVMH set an example by approaching succession as a long-term strategic matter, others show what can go wrong without a clear plan. The leadership uncertainty at Disney in recent years is a striking example. Share prices react not only to numbers but also to leadership and confidence.

Good leadership is not only reflected in today's numbers but especially in how a company prepares for tomorrow. A solid succession plan prevents discontinuity, safeguards culture and strategy, and increases confidence among investors and other stakeholders. In many cases, it is a hidden source of value. Research shows that companies with clear succession strategies tend to exhibit higher stock price stability around CEO changes.

The relevance of this topic is not limited to large publicly listed companies. In the private sector too, the lack of succession planning is often a silent threat. Especially family businesses or locally rooted enterprises tend to postpone the succession question, putting continuity and marketability under pressure. In the context of Curaçao, it is striking how few entrepreneurs have concrete plans for transfer or sale. Yet, it turns out that a company with a well-thought-out succession plan becomes significantly more attractive to buyers, partners, and investors. It leads to higher valuation multiples, greater negotiating power, and a smoother transfer process.

For investors, it is therefore meaningful to look beyond financial ratios and growth expectations. Factors such as management quality, team structure, and succession planning can be decisive for the long-term performance of an investment. In an environment where compounding, stability, and risk management are becoming increasingly important, these soft factors deserve more attention.

The Buffett case shows how succession can be a strategic instrument rather than a necessary evil. It is an opportunity to protect and create value. Whether in public equities, private equity, or direct ownership: companies that organize leadership sustainably have an edge.

Those who invest in companies with structural continuity are investing in calm, predictability, and future resilience. And that, time and again, proves to be the most underestimated form of return.

Disclaimer

This publication is intended for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any financial instruments. Past performance has no guarantee of future results. Always consult your financial advisor before making investment decisions.