A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. When Jon Paul Pérez graduated college, he assumed he would go to work for his father. After all, Jon Paul had been learning the family business since he was a kid, following his dad to the office at Related Group, working summers on construction sites and developing a passion for real estate development. Jon Paul’s father, Jorge Pérez, was thriving as Miami’s “condo king,” building ever-taller and more luxurious condo towers in South Florida. At his graduation dinner, Jon Paul asked his dad when he could start work at the company. His dad’s response: “You’re not going to work for me.” “I was shocked,” Jon Paul said. Jon Paul would learn his father had a plan, one that would take years to complete before he could join the family firm. Now, as he takes over as CEO of Related Group, the Miami-based real estate conglomerate with a $40 billion portfolio across condos, rentals and commercial space, Jon Paul said he appreciates the long journey he faced on his way to the top. It’s one faced by many of today’s ultra-wealthy, as they seek to transfer family businesses to the next generation. A study by Brown Brothers Harriman found that 91% of private business owners say it’s important for their business to remain in the family. Yet three quarters say roles for the next generation are either not well defined or not fully communicated. A family-business survey from PwC found that only a third have robust succession plans. As a growing share of family-business founders reach their 70s and 80s, questions around succession have become more pressing. Is the next generation ready? Is the founder really ready to hand over the reins? Which of the kids should get the top roles? Are they truly interested in the business or are they just doing it out of family duty? Related chairman and founder Jorge Pérez sat down with Inside Wealth along with his sons Jon Paul and Nicholas, who is president of condominium development at the firm, to talk about how they’ve managed the process. Here are three main takeaways on successfully preparing the next generation: 1. Love it or leave it When the kids were growing up, Jorge would take them to the office on the weekends after their soccer games and sports games. “In my mind I was saying, ‘They’re either going to like this or hate real estate,’” Jorge said. “I told them … just because I’ve been successful in real estate, don’t pick something you don’t have a passion for. Because life is very tough the way it is and if you wake up every day and do something just for making money or that you don’t really like, it’s not going to work.” Jon Paul said that along with visiting the Related office and rental buildings as a kid, he spent summers working at the company and learning the business – from finance and budgets to construction and contractor bids. “I knew I wanted to be involved in the business,” Jon Paul said. “I associated life with real estate.” Nicholas, for his part, said that after his early dreams of being a pro tennis player started to fade, “I knew I wanted to be in real estate.” He said his dad would often come home with floor plans and they would study them: “Dad would say, ‘This is the width of a bedroom, this is why you put a door here.’ It was creating something from nothing. That’s what I love about coming to work every day – the ability to create.” 2. You have to earn the job “I didn’t want the rest of the company to feel that they were brought in because of their last name,” Jorge said. So he imposed a rule: In order to work at Related, his children had to get a master’s degree from a top business school and work in the New York real estate industry for five years. If they didn’t get a master’s, they had to work for seven years in the business first. After graduation, Jon Paul went to work for Related Companies in New York, the development firm founded by Stephen Ross, who is also Pérez’s former business partner and still close friend. (Similar names, separate firms.) Despite the family relationship, “You were either going to sink or swim,” Jon Paul said. “You were working 12-hour to 14-hour days, learning to ask the right questions. It was the best thing that ever happened to me because I wanted to succeed. I didn’t want to fail.” In 2012, as the Florida real estate market was picking up again and after five years in New York, Jon Paul called his dad to ask for a job a second time. This time, Jorge agreed. But instead of starting in the high-profile condo division, Jon Paul had to start on the more prosaic rental business. Eventually he moved to the condo division, later becoming president of the firm. This month he was named CEO. “You learn you need to work harder being in our shoes to prove to others it’s not being given to you,” Jon Paul said. As Jorge said, “The greatest thing for a father is to see his kids do better than he does.” 3. Pass down values along with assets Along with skills, training and expertise, Jorge made sure the next generation maintained the values of Related. (Jorge’s daughter, Cristina, is a social worker and involved in philanthropy and his youngest son Felipe is attending college.) “You have one reputation,” Jon Paul said. “The Pérez family, and Related, have a reputation of doing the right thing. Whether that’s providing the highest quality affordable housing or anything else. We have a very strong moral compass. That’s something he has passed down to us and that’s how the company thinks.” Nicholas said his dad also ingrained in them the importance of hard work. “Nothing replaces hard work,” Nicholas said. “There is so much competition, and everyone is going to be fighting you. So if you’re not working, someone else is going to get that site or have a better idea.”
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
When Jon Paul Pérez graduated college, he assumed he would go to work for his father.
After all, Jon Paul had been learning the family business since he was a kid, following his dad to the office at Related Group, working summers on construction sites and developing a passion for real estate development. Jon Paul’s father, Jorge Pérez, was thriving as Miami’s “condo king,” building ever-taller and more luxurious condo towers in South Florida.
At his graduation dinner, Jon Paul asked his dad when he could start work at the company. His dad’s response: “You’re not going to work for me.”
“I was shocked,” Jon Paul said.
