Donald Trump is now the 45th president of the United States and his family will have the wheel of the family business. The name Trump is more a brand than a specific business, but it is a family legacy that now has been passed on to the next generation. Regardless of your political persuasion, it is important to look at the factors surrounding this family organization and learn lessons from what has been a rise of fortune.
Trump took over the family real estate business from his father. His mother and all four grandparents emigrated from Europe, were of German and Scottish ancestry and like so many immigrant families, worked hard to establish themselves in the U.S.
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The original family name was not Trump, but Drumpf, anglicized like so many Teutonic families looking to shed their European roots. Milwaukee and Wisconsin are replete with such name changes, particularly after World War I, as being German was seen as being less than patriotic to our adoptive nation.
Much has been made over the six business bankruptcies: Trump Taj Mahal (1991), Trump Plaza Hotel and Casino (1992), Plaza Hotel (1992), Trump’s Castle (1992), Trump Hotels and Casino Resorts (2004), and Trump Entertainment Resorts (2009). These were not personal bankruptcies, but in essence were overleveraged real estate deals that went badly. Trump took advantage of the bankruptcy laws and the ability to loss carryforward in business, which presumably explains his potential ability to avoid personal taxes. As this is not afforded to the run-of-the-mill taxpayer, it is understandable when laymen hear of such things, they consider these actions abhorrent. We must put into context the fact that Walt Disney parlayed bankruptcy into commercial success after years of failed prospects. While I find bankruptcy repugnant, the reality is it is perfectly legal and history is replete with success coming from such early failure.
Trump, from early on, has been diversified, with holdings in the United States Football League and a failed attempt at taking over the Buffalo Bills NFL franchise. His pageants have created scandal, and his appearances on WWE wrestling were a missed opportunity to cast doubt on his credibility. While diversifying, he maintained a steady tie with his family and his devotion and confidence in his children was on display during his television show, “The Apprentice.” Don Trump, Jr., Eric, and Ivanka all had significant facetime on the show and looked to be legitimate confidants of their father. They each have contributed to the running of parts of the Trump empire, with Ivanka having branched out into her own line of products.
With the Trump ascension to the presidency, it is not surprising the family is being asked to step in to control the Trump holdings. It should come as a surprise to nobody that this is the step being taken and we should not be suspicious any more than we are when a parent passes the business on to the next generation. The truth is the children were actively involved in the Trump business before his presidency. To demand that any president-elect give up all their business holdings is not reasonable. If it were, what businessperson would ever run for elected office? There is a reasonable expectation of distance and oversight to be expected of anyone who assumes the highest office in the land. But we should not judge this transfer of power as something suspicious. Those of us in family businesses and involved with family businesses should champion this move as the appropriate transition of authority from one generation to the next.
It will be interesting to watch this family business evolve under the next generation and equally so to see if Trump children from other marriages, such as Barron, grow up to be in the family business. It will be interesting to see this family business transition and morph under the watchful eyes of the world. Just as so many other things presidents are involved with become sacrosanct in America, it will be good to have a family business preeminent.
-David Borst, Ed.D., is executive director and chief operating officer of the Family Business Legacy Institute, a regional resource hub for family business. He can be reached at davidb@fbli-usa.com.
