The seeds of the dispute were planted when the family patriarch passed away in August 2020, leaving the family with an eye-popping inheritance tax bill of approximately KRW540 billion ($479 million). Korea’s inheritance tax rates are among the highest in the world, with controlling shareholders subject to a rate of up to 60%.
To address this financial burden, the founder’s widow, Song Young-sook, and her daughter, Lim Joo-hyun, proposed a merger with OCI Holdings, which has core businesses in green energy and chemicals. However, the deal was opposed by the matriarch’s own sons, Lim Jong-yoon and Lim Jong-hoon.
Analysing the predicament, South Korea’s Chosun Ilbo wrote that the family feud “compromised the company’s governance and led to a significant drop in its stock price.”
Hanmi’s situation thus illustrates that when business succession planning is not done correctly, the impact can be felt throughout the organisation, upending strategic initiatives, affecting employees, putting pressure on stock prices and punishing minority shareholders.
See also: For Eu Yan Sang’s Richard Eu, seven Cs beat five
National University of Singapore (NUS) associate professor Yupana Wiwattanakantang, a researcher on succession planning for family enterprises, says that “family decisions reverberate far beyond the household”.
“Strong family businesses drive growth, create jobs, and shape communities,” she explains. “Helping families navigate this transition is therefore not only a private matter, but an issue that holds broader economic and social importance.”
So how can families navigate wealth and business succession? To shed some light on the matter, UOB Private Bank, Boston Consulting Group and NUS collaborated to study succession planning in Asian families, where family wealth is largely tied to the family business.
See also: Swiss reject millionaire inheritance tax fearing wealth exodus
Entitled The Asia Generational Wealth Report 2025: Succession in a new era, the report highlighted that the region could soon encounter a wealth and business succession crisis as family business founders and leaders reach retirement age without proper succession plans, potentially setting the stage for internecine strife between heirs and company dystopia.
“When you look at the data, most families do not have good [succession] plan, and that’s why they cannot last for generations, and most of them fail very quickly, in line with what we call the three-generation syndrome,” says Yupana.
“The next chapter of the region’s wealth will be defined by the complex task of wealth transfer, with many Asian businesses being relatively young and hence lacking in institutionalised and tested governance structures,” says Chew Mun Yew, head of UOB Private Bank. “As a third-generation bank ourselves, we have seen how early engagement, thoughtful planning and guided conversations can transform succession.”
Chew adds that Asia is becoming a “dominant force” in the global wealth market, with the bank’s high-net-worth client base doubling since 2021.
Challenges to succession
The paper identified challenges to wealth and business succession in families. Firstly, succession is not simple. Formal structures — often complex — are required to establish clear ownership and control, preventing disputes like the Hanmi Pharmaceuticals case. Compounding the complexity of succession are issues such as navigating inheritance laws and different legal, regulatory and tax systems when assets are held in multiple countries.
Secondly, there is a divergence in aspirations across generations. More than 90% of first-generation wealth holders prefer the family to retain business control, but more than a quarter cite that their heirs lack interest in taking over, while just under a quarter said their heirs are not prepared.
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Thirdly, succession planning may be delayed, leading to reactive, rather than active, wealth and business transitions. Among business founders, 37% cited health issues and 43% cited business circumstances as primary triggers for business handovers. With sudden handovers, successors may not be prepared to take over the business.
Separating business from family
• Eu Yan Sang
Eu Yan Sang is a leader in traditional Chinese medicine (TCM) with more than 210 retail outlets in China, Hong Kong, Macau, Malaysia and Singapore. Founded in 1879 by Eu’s great-grandfather, Eu Kong, the second and third characters in the company’s name in Chinese means “caring for mankind”. The company’s first shop was opened in Gopeng, Perak. Eu Kong’s son, Eu Tong Sen, took over the business and expanded it in the 1920s.
After joining the family business in 1989, 4th-generation family member Richard Eu set out to modernise the business. He also planned for an orderly succession, having witnessed how the business was impacted when the family assets (including the company) were equally divided among his grandfather’s 13 sons.
“When the business ownership was divided equally among my … uncles [and father], each of them had equal decision-making rights,” he shared in the whitepaper. “After my eldest uncle passed away, the absence of clear leadership made it increasingly difficult for the family to align on key business decisions.
In 2016, Eu Yan Sang was privatised at a valuation of around $270 million, with Eu joining forces with private equity firm Tower Capital Asia and Temasek unit Blanca Investments to steer the company’s growth. Subsequently, Eu stepped down as CEO and a professional CEO was hired to run the company, with Eu appointed as chairman.
In 2024, the company was bought over by a Japanese consortium for around $800 million, justifying Eu’s focus on doing what is best for the company — getting a professional CEO. He was cited in the whitepaper, stressing the importance of sustaining the business. “You need to split the family from the business. I would reach a ceiling in competence — I have never led an MNC before,” he says. “It is about the survivability of the business, and the firm needs the best man for the job.”
Although Eu’s son is involved in the business, Eu does not think the next generation needs to run it. “It’s up to him to prove himself, whether he’s capable of doing it or not in the long term,” shares Eu in an interview with The Edge Singapore.
“It’s not just about having an outside CEO,” says Yupana. “But having the mindset of thinking about the firm first … Firm value is more than the family.”
• Toyota
Japanese carmaker Toyota has appointed CEOs who were not family members on several occasions throughout its history. These “placeholder” CEOs held the fort until a family heir was deemed ready to succeed, ensuring business continuity.
From 1995 to 2009, there were three external CEOs before family heir Akio Toyoda took over the steering wheel. During the 14-year period when it was led by an external CEO, Toyota’s share price generally trended upward, reaching a then-high of around JPY1,590.
In addition to professionalisation, Toyota stood out in another key aspect of family business succession — the transfer of intangible assets such as knowledge, networks, and values to run the business.
“From a young age, the Toyota family members were immersed in learning about the business, the company’s value of making great cars, and learnt the importance of working with suppliers and communities, so they act like the guardians of the Toyota brand,” says Yupana.
Toyoda continued the business-first family’s philosophy by nurturing a non-family member who replaced him as CEO in April 2023 to drive the company’s future. “I am a carmaker, through and through,” he shares on the company’s website. “And I see that as my own limit.”
Toyoda adds that new CEO Koji Sato will be the one to steer Toyota towards becoming a “mobility company”. So far under Sato, Toyota has continued its progress as it navigates the complex challenges of the evolving automobile industry.
• Merck
The Merck Group is a German multinational science and technology company. Founded in 1668, it is controlled by the Merck family through a holding company that owns more than 70% of Merck’s shares.
In a 2012 interview with the Korea Herald, Professor Dr Frank Stangenberg-Haverkamp, an 11th-generation member of the Merck family, said, “It’s quite unique for a company (to be) 344 years old … and we are definitely the oldest pharmaceutical and chemical company in the world.”
The ownership and management of Merck have been the subject of much study. How does a company with more than 200 family shareholders keep everyone aligned and allow the company to thrive?
Merck has designed a unique dual governance structure — family governance for family members and corporate governance for company operations. The structure comprises formal mechanisms that determine the roles and responsibilities of Merck family members and their involvement in the business, pre-empting family members and disputes from affecting the company’s operations.
The family makes the “fundamental entrepreneurial decisions of the Merck Group” and does not play a role in the management of Merck, according to the conglomerate’s website. This arrangement also separates ownership from management and is already in its 13th generation. It allows the family to create space for professionals to run the company, retain the former’s influence and more importantly, enable both parties to stay on the same page.
Yupana likens establishing the corporate and family governance structures of family businesses to “setting up the new rules of the game for the next generation to play”, and Merck is the poster child for establishing frameworks that marry family and business interests.
Through Merck’s unique governance structure, the business is able to take a long-term view, with Stangenberg-Haverkamp noting that the family thinks in “generations”, not “quarters”.
To prepare the younger generations to take ownership of the company, the Merck family invests heavily in developing ownership competence. It has a comprehensive ownership development programme that begins at an early age and covers multiple aspects of the business, from company-specific knowledge to general business skills, interpersonal abilities, and family dynamics and history, according to an article on familybusiness.org.
The younger generation is imbued with the family’s values, including humility and prioritising business interests over family interests.
“Merck’s children are educated to be modest,” says Stangenberg-Haverkamp in 2012 to the Korea JoongAng Daily. “None of my children had a car when they were at university. I told them to work if they want to own [one].”
In 2018, he shared with Arabian Business what another member of the Merck family told him: “Look, the family business is far more important than individuals in the family. Whatever decision you take, the business has to be paramount, and not the family. Leave the money in and don’t take it out; it is only then that the company can thrive and flourish.”
Since the company went public in 1995, Merck’s share price has been on an upward trend, rising from less than EUR30 to nearly EUR230 in 2021.
Risk or opportunity?
The dispute for control of Hanmi has since been resolved and the company is thriving again. But this chapter in the company’s history serves as a reminder for investors who invest in family businesses in Asia.
In contrast, the stories of Eu Yan Sang, Toyota and Merck serve as successful examples of family business succession. Their success lies in adopting a business-first family philosophy, embracing external business leadership, establishing formal governance structures, and transferring key assets to heirs.
Asia’s private wealth is forecasted to reach one-quarter of the global total and hit US$99 trillion by 2029. Most of the wealth is tied to family businesses. The whitepaper highlights how Asian families are grappling with intergenerational wealth transfer, particularly business succession.
For these Asian family businesses, Hanmi, Eu Yan Sang, Toyota and Merck can serve as references on business and wealth succession. If succession planning is not handled with due diligence, much of the wealth of these families may adhere to the adage of “wealth does not last three generations” and disappear.
For investors, family risk is usually not included in a company listing prospectus. Before buying shares in family-run businesses, it behoves one to dig deeper into the family succession plan than just reading the securities documents — because family is not in the prospectus.
