The will of iconic fashion designer and billionaire Giorgio Armani, who passed away earlier this month at 91, has been made public. Notorious for fiercely guarding his company’s independence, Armani’s will surprisingly instructs his heirs to sell a 15% stake in the business within 18 months and then 30% and 54.9% of the company to the same buyer within three to five years. Alternatively, the estate-planning document directs taking the company public on an Italian stock exchange or an international market of similar standing.
This comes as a shock to many in the fashion industry, as Armani has always avoided selling out to the big conglomerates. The will spares no detail, even naming three French and Italian luxury heavyweights as Armani’s preferred bidders—LVMH, L’Oréal and EssilorLuxottica.
Who Inherits?
Armani’s foundation, his longtime partner Leo Dell’Orco, as well as his sister Rosanna Armani, her son Andrea Camerana and his two nieces, Silvana Armani and Roberta Armani are named as heirs to the fashion empire, according to Forbes, Though successful in their own right, the heirs will officially become billionaires, with analysts estimating that the fashion house is valued between $5.9 billion and $14 billion.
It appears that Dell’Orco will help oversee the sales process. The document also instructs that the foundation must retain at least a 30.1% stake in the company, to ensure that the fashion house’s founding principles and values continue to be abided by.
Unlike many family businesses, Armani has no children to take over as successors after his death. It’s unclear whether that played a role in the decision to sell stakes in the company rather than keep the brand in the family or whether the other family member heirs didn’t want to run the company. Regardless, Armani laid out a well-thought-out plan to preserve his legacy and his company. The will, one of two updated last spring (the other was for his vast private property portfolio, which includes dwellings, artwork and a yacht among other assets), partially on the back of an envelope, also leaves instructions to ensure that future collections are designed in line with the brand’s “elegant and understated” aesthetic.
The Foundation
Regarding the ownership and control structure and the foundation’s involvement, Rick Nott, managing director at Angeles Wealth Management, said, “Overall, this seems like a strategy that worked for Giorgio’s situation, though I might have done a few things differently. In the end, no set plan works for all families, but it truly is something that everyone, especially those where reputation has financial consequences, needs to consider early.”
“Foundations have a long list of benefits, but their drawbacks are equally as large. Not everyone wants as much publicity around their estate. For those who value privacy, a similar outcome in many cases could arise by using a combination of donor-advised funds, irrevocable trusts and/or legal entities. Such a combination could allow for tremendous charitable giving and control of your lifelong asset by your family and anonymity,” he added.
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