It’s been six years since “the chairman” gave up his seat. But in the time since Percy E. Sutton, former CEO of Inner City Broadcasting Corp., handed over the reins to his son, Pierre, his fortune has only grown. The legendary entrepreneur’s massive holdings, which include radio stations, cable TV franchises and real estate, have continued to thrive without the elder Sutton overseeing the day-to-day activities. But his company’s continued good fate didn’t happen by accident–just the opposite, in fact.
From his modest private office in Harlem–a few miles from Inner City’s headquarters on posh Park Avenue in midtown Manhattan–the silver-maned patriarch details the intricate process of transferring power to the next generation. This transition has allowed the 76-year-old to gradually step back from a company it took a lifetime to build, confident that his business empire would continue to thrive in his absence.
In 1980, Sutton drafted a comprehensive plan that transferred control of the conglomerate to his son and provided significant management roles for his daughter Cheryl, nephews Charles, Clifton, Paul and Oliver, as well as the progeny of shareholders. (The Sutton family owns more than 65% of Inner City’s shares.)
But Sutton maintains the torch-passing didn’t happen overnight. “It took a decade to train the next generation and pass on the management philosophy,” he says. “And I needed time to gradually remove myself from the company. Now it’s time for my children to take the next step.”
As the millenium approaches, that next step is rapidly advancing for many of the companies that hold a place on the list of the largest African American-owned companies. For decades these hard charging, pumped-up chief executives have endured what could easily be tagged as a long and, at times, painstaking marathon. Many of these industry leaders, like Sutton, are approaching retirement age and realize that they are now competing in a different contest: the corporate relay.
But after a lifetime spent supervising their enterprises, many of these chief executives have yet to figure out whom to pass the baton to–or how the whole transfer of power should take place. Yet, so much rides on this changeover: These founding fathers are not only betting on the future of lifelong enterprises, but often their family’s primary wealth- generating assets are also at stake. (More than 30% of family-owned operations have more than 75% of their net worth invested in the business.) So passing on the family business requires a concrete succession scheme, strong leadership and thorough estate tax analysis.
The changing of the guards within the BE 100s comes at a critical time– the stakes have never been higher. Economic, financial and technological obstacles of the coming century will be tougher to hurdle. And these businesses, which often serve as a gauge to the state of the black economy, need to be more nimble as expansion capital becomes tighter and the competition grows fiercer.
The BE 100s largely consists of closely-held entities that are in need of clear-headed succession planning: 27 of the companies are 25 years or