Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Van Hoorebeke Family Built a Diamond Empire in Antwerp
Transcript
- Lucas: In Antwerp's diamond district, there's a building on Hoveniersstraat where the security guards know every face. No sign on the door. No receptionist. You need an appointment, and the appointment is with one surname: Van Hoorebeke. Luna: Three generations, same family, same building. That's rare even by family business standards. Lucas: They've been cutting and trading diamonds there since 1923. And here's the number that matters: they have never taken a loan. Not from a bank, not from a private lender. Zero debt on the balance sheet. Ever. Luna: How do you run a diamond business — where a single stone can cost millions — with no debt? That seems like you'd be limiting yourself. Lucas: It's the opposite, actually. It forced them to be surgical about what they buy. They only purchase rough diamonds when they've already pre-sold the polished product. Their inventory turnover is about eighteen days. Industry average is closer to sixty. Luna: So they're essentially a just-in-time diamond operation. No warehousing millions in unpolished stones. Lucas: Exactly. And that discipline comes from the founder, Henri Van Hoorebeke. He was a polisher who started with one table. He watched too many colleagues go under in the Depression because they'd borrowed against inventory that collapsed in value. His rule became: if we can't pay cash, we don't buy. Luna: That rule is still in place today? Lucas: It's written into their family constitution. They have a document — about forty pages — that every family member signs when they turn twenty-one. It covers everything from dividend policy to who can work in the business. The no-debt clause is article three. It's non-negotiable. Luna: A family constitution. How detailed does it get? I'm thinking about control, ownership, the usual succession landmines. Lucas: Very detailed. Only descendants of Henri can own shares. No in-laws, no cousins by marriage. And no one can sell their shares outside the family. If you want to exit, you sell back to the company at a formula price based on book value. That formula was set in 1987 and hasn't changed. Luna: That book-value formula — that could create tension if the company's real value is much higher. Did it? Lucas: It did. In 2015, a second cousin named Pieter wanted out. The formula valued his stake at about one point eight million euros. But De Beers had just made an informal offer to buy the entire company for two hundred million. Pieter's slice would have been roughly eight million on the open market. Luna: That's a four-million-euro difference. He must have fought it. Lucas: He sued. Spent two years in Belgian courts arguing that the constitution was an unfair restraint on his right to get fair market value. The court ultimately upheld the constitution, citing a 1998 Supreme Court precedent that family business agreements are enforceable if they're freely entered into and reasonable. Pieter had signed the constitution at twenty-one, seventeen years earlier. Luna: So the constitution held. But that doesn't mean the family wasn't shaken. A public lawsuit in the diamond world — that's not a small thing. Lucas: It was a crisis. For about six months, the Antwerp diamond exchange was buzzing with rumours that the Van Hoorebekes were splitting. Suppliers got nervous. But here's what happened next: the family used it as a catalyst to revise the constitution. They added a mediation clause and an independent valuation every three years, so the formula price is closer to fair value. Pieter ended up selling at the revised price — about four point two million — and he's now on speaking terms with his cousins again. Luna: That's actually a smart outcome. They preserved the rule but made it more equitable. Did the buyout offer from De Beers come up again after that? Lucas: The board — which is three family members and two independent advisors — voted unanimously to decline. The logic was simple: the company generates about twelve million euros in free cash flow per year, pays a six percent dividend, and has zero debt. Why sell a machine that prints money for a one-time cheque? Luna: Especially when that cheque would be taxed at capital gains rates and then you'd have to reinvest in something riskier. The math probably didn't work unless they wanted to exit entirely. Lucas: Exactly. And the current generation — that's the third generation, led by Philippe Van Hoorebeke, Henri's grandson — they see themselves as stewards, not sellers. Philippe told a Belgian business magazine in 2023: 'We're not building this to flip it. We're building this so our children can build on top of what we built.' Luna: That's a quote that belongs on a family business tombstone. But let's talk about how they actually make money. The diamond industry has changed massively. Lab-grown diamonds, ethical sourcing concerns, the shift away from mined stones. How has a family with a 1923 mindset navigated that? Lucas: They adapted, but cautiously. In 2019, Philippe invested in a blockchain traceability platform called Tracr that tracks every stone from mine to cutter to jeweller. Every Van Hoorebeke diamond now comes with a digital certificate that shows its full provenance. That was a two-million-euro investment — paid in cash, naturally. Luna: Of course. And lab-grown? Lucas: They don't trade lab-grown. Philippe's position is that lab-grown is a different product category — it's a manufactured good, not a natural stone. But they've started a separate subsidiary called Van Hoorebeke Innovations that works on diamond certification technology. So they're making money from the lab-grown boom without handling the stones themselves. Luna: Smart. Stay in your lane but monetise the disruption. How many family members actually work in the business? Lucas: Nine. Out of about eighty descendants. The constitution requires that anyone working in the company has at least five years of outside experience first. No nepotism hires straight out of university. And they have to be voted in by the family council — a two-thirds majority needed. That's kept the workforce lean and the politics manageable. Luna: Nine out of eighty. That means the majority of the family lives off dividends. What's the dividend policy? Lucas: It's fixed at sixty percent of net profit. The rest is reinvested. That's article twelve in the constitution. It's meant to balance rewarding shareholders with growing the business. Over the last decade, the dividend has grown at about five percent compound annually. Not spectacular, but steady. Luna: If today was actually useful to you — and I know I learned something about how a family business can thrive without debt — the way these conversations stay ad-free is listener support. You can find us at buy me a coffee dot com slash fexingo. It's a small way to keep these episodes going. Lucas: Yeah, that's right. We don't run ads, we don't have sponsors. It's just listeners who find value in the show. If that's you, the link is buy me a coffee dot com slash fexingo. And we truly appreciate it. Now back to Antwerp. Luna: So where does the fourth generation stand? The oldest of Philippe's kids is twenty-seven. Are they being groomed? Lucas: His daughter, Elise, is twenty-seven. She worked at McKinsey for three years, then spent a year at a diamond polishing house in Surat, India — not a Van Hoorebeke affiliate, a completely independent firm. She's now back in Antwerp as the head of business development. She's widely seen as the likely next CEO, but the constitution requires that the family council vote on leadership every five years. Nothing is guaranteed. Luna: That's a healthy tension. Meritocracy with a safety net. What's the biggest risk they face over the next decade? Lucas: I'd say it's the same risk every family business faces: the next generation doesn't want it. The diamond trade is old-world. It's relationship-driven, secretive, and physically located in Antwerp. If Elise's generation decides they'd rather be in tech or impact investing, the talent pipeline dries up. Philippe has said publicly that he'd rather sell the company than put an uncommitted family member in charge. Luna: That's a remarkable level of honesty. Most family business leaders would never say that out loud. Lucas: He's a pragmatist. He knows that the no-debt model works only if the people running it are fully engaged. If they're not, the whole thing becomes a passive income stream, and then you might as well sell. But for now, the fourth generation seems committed. Elise has been vocal about wanting to modernise the branding and open a direct to consumer channel for ethical diamonds. Luna: That would be a huge shift for a company that's always been wholesale-only. Do you think they'll do it? Lucas: The family council is debating it. The older generation is worried about brand risk and alienating their wholesale clients. But the numbers are compelling: direct to consumer margins are about forty percent versus fifteen percent wholesale. And the younger generation feels strongly that the next twenty years belong to brands with a story. The Van Hoorebeke story is a good one — a century of independence, no debt, family governance. That's a brand narrative that could work. Luna: It's a beautiful story. But stories don't cut diamonds. Execution does. I hope they get it right. Lucas: So do I. And if they do, we'll probably do a follow-up episode in a few years. But for now, the Van Hoorebekes are a rare example of a family business that built durability through discipline — not through scale, not through leverage, but through a set of rules they've stuck to for over a century. Luna: Rules that cost them a potential two-hundred-million-dollar exit, but gave them something more lasting: control over their own future. Lucas: Exactly. That's the trade-off every family business makes. The Van Hoorebekes made theirs, and they're still standing.