FAMILY OFFICE A NEW TREND IN ISRAEL Israel is a small country, about the same size as Belgium in Europe or New Jersey in North America. It is located on the eastern shore of the Mediterranean Sea and has excellent access by air and sea to Europe, Africa, Asia, and North America. Recent statistics show that Israel’s population of 8,5000,000 is comprised of 75% Jews and 25% nonJews all of whom enjoy equal legal rights in all areas of life. Israel is a country of immigration. More than 40% of residents in Israel were not born in the country. Some wealthy immigrant families relocate with their assets to Israel and others may keep part of their wealth in the country of origin. There are no formal statistics available regarding the number of high net worth individuals in Israel. A millionaire is defined, generally, as a person with more than US$1 million in liquid assets. An ultra-high net worth individual (UHNWI) is defined as one with over US$30 million. According to the report of Berkshire Hathaway Company: 1. There were 79,186 HNWIs in Israel in 2015, which collectively held US$447 billion in wealth. 2. The Israeli HNWI population rose by 2.9% in 2015, following a 3.0% increase in 2014. 3. The Israeli HNWI population is forecast to grow by 17.7% to reach 96,790 in 2020, while HNWI wealth is projected to grow by 24.3% to reach US$579.7 billion. 1. Family Business in Israel How do Family Businesses cope with their present and future ownership and management of the business? The following stories of family businesses in Israel will demonstrate this: Iscar family business - Stef and Eitan Wertheimer. Iscar was founded in 1952 by Stef Wertheimer in the Western Galilee town of Nahariya and moved in 1982 to the Tefen Industrial Zone, about 20 kilometers away. In 1984 Stef, the father, handed over the reins to his son Eitan. In 1995 Eitan Wertheimer passed the CEO’s seat to Jacob Harpaz (a non -family executive) and
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Dr. Alon Kaplan
Advocate & Notary went on to serve as chairman and later president. Iscar is headquartered in the northern Israeli community of Tefen and is now formally known as International Metalworking, or IMC. In 2006 Berkshire Hathaway bought an 80% stake in Iscar for $4 billion. At a later stage, the son Eitan, sold to Berkshire Hathaway his 20% share for USD 2 billion. The deal gave Iscar a total value of about $ 10 billion, about double its valuation when Berkshire Hathaway bought its initial stake for $4 billion. In an interview to the Israel economist newspaper Eitan was quoted: “it was important for us to sell the business before family problems arise. We see what is happening in other family businesses and there is no need to wait for problems. … It is preferable that each generation will start his new own business.” 1.2. Keter Plastic company, another “happy end”. Sami Sagol developed the Keter Plastic company founded by his father in 1948 .The company is the world’s leading manufacturer of plastic consumer products.