Perspectives on Going Public

Going public is a move fraught with risk for many family business owners. Yet a surprising number have done it, greatly benefiting both their companies and their families. In the United States, initial public offerings have been popular with owners and investors in the last year, and they are on the rise in Europe. Thus it is a good time to review the risks and rewards. Going public can be an excellent way to raise capital, provide a way for shareholders to cash out, and attract top managers. However, it can virtually eliminate privacy, limit management's power, even set the table for atakeover.

Owners who are thinking about going public must confront some difficult tradeoffs. These were described by respondents to a recent study I completed of 200 owners, managers, and successors of family businesses from 20 countries, ranging in size from 20 to 2,000 employees. Respondents from Europe, Asia, and the United States provided extensive written comments about the major advantages and disadvantages of going public, as well as the best time to do so. Their views are summarized here. While they present primarily a European viewpoint, there is remarkable agreement among respondents from the various continents on the greatest risks and rewards of going public.

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