Family Business Magazine Blog
A recent article in The Practitioner -- an online publication of the Family Firm Institute, an organization for professionals who advise and study family enterprises -- pointed out the difference between "firm survival over time" (continuity of a family business through the years) and "longevity of a family enterprise" (a family's ability to create wealth and value over generations).
The Practitioner article -- by Pramodita Sharma, the Sanders Professor for Family Business at the University of Vermont's School of Business Administration and a visiting scholar at Babson College -- argued that family enterprise success can be defined in ways other than leadership transfer from one generation to the next. "Both the creative destruction of firms and pruning of the enterprising family are integral parts of longevity of an enterprising family ....," Sharma wrote. "Recent reviews of the research on succession, governance, professionalization and performance all point in the same direction -- that one size does not fit all and the overarching numbers of ‘success' are insufficient to capture the complexity and heterogeneity of family enterprises and their pathways to success."
Family Business Magazine's cover subjects for May/June 2014, the Power family, sold J.D. Power and Associates to McGraw-Hill in 2005....Read more
Free Feature Article
There is now a real investor desire, and even a need, for strong companies to be in the public markets. According to a May 2017 Ernst & Young report, the number of domestically incorporated U.S. listed companies dropped by more than 45% between 1996 and 2016. The amount of cash liquidity in the U.S. banking system is $2.2 trillion, according to Federal Reserve economic data (Dec. 7, 2017).
Going public can be the capstone accomplishment of a long and successful career.
What questions should family business owners be asking in 2018 to determine if they are ready to take their company public?
Question #1. Which has greater priority: maximizing wealth and liquidity or maintaining maximum control?
One will prevail over the other, and it is best to consider this question early in the process.
Illustrative of this is the recent Snap Inc. IPO. The founders retained control through a dual-class stock structure that gave them 89% of the voting power although they held only 44% of the equity. Because of the lack of voting rights, Snap Inc. shares were excluded from the relevant MSCI indices, suppressing the pool of prospective investors.
Question #2. Whose wealth is being maximized, current or...Read more
Taking Stock explores all the questions, relationships and emotions universal among family businesses, as well as themes — guilt, survival and apartheid — unique to a prosperous Jewish merchant family in South Africa.
Watch the trailer for Taking Stock.