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Family and F inance - some perspectives

Family and F inance - some perspectives Andreas Widegren Department o f Business Studies; Uppsala University. Disclaimer. 0.

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Family and F inance - some perspectives

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  1. Family and Finance- someperspectives Andreas Widegren Department of Business Studies;Uppsala University

  2. Disclaimer 0 The contents and the views expressed during this presentation are my personal perspectives and do not reflect the views or policies of my current employer or any other organizations that I am affiliated with.

  3. Andreas Widegren Current • Head of Section – Capital Markets Policy StrategySwedish Ministry of Finance • PhD Candidate and Lecturer in Financial Accounting; Uppsala University. Capital Structure Focus. Background • MSc in Finance and International Business from Mannheim Business School and Stockholm Business School • Career in Investment Banking (UBS, Citigroup & Dresdner Bank) • Background in public family firm

  4. Case • Company founded in 1974 • Three founding partners • Great expansion: • Today represented in over 30 countries • Both third party distribution and own manufacturing • Around 1000 employees and € 250 million revenue • Public since 2006 • Founding families control today about 35 percent • Over 35 members in owner families • Currently about 15 possible “heirs”

  5. Problem • Trade off between continuity and growth • Growth requires capital • Continuity requires strength and unity • 35 wills impossible to coordinate • Different wants and needs • Who should take over? • Firm is seen as personal wallet, dependence • Financial discipline • Avoid a top heavy family run organization • Avoid “stupid cousin” phenomenon

  6. Pecking order of finance • Family and friends • Bank • Private placement • Equity Capital Markets • Debt Capital Markets Capital Market Experience & Requirements

  7. These issues were identified early on

  8. Alternatives • Family run • Difficult to distinguish between firm and family • Economic dependence • Very active in operations • Bias perspectives, limited external input • Investor • Short term perspective • Traditional European view; IFRS created for investors • Not an active role

  9. Alternative • Owner • Trade-off between investors and family • Stakeholder perspective • Long term perspective • Members not necessary operational (optional) • Independence between firm and personal economy • Choice to be investor or to leave • Avoid dependence on certain individuals • Faster adaptation to changing environment

  10. Consequences • Fostered as owners • Insight into the firm and product understanding • Life independent of the firm • Not expected to be operational or take over the “farm” • Choice to exit or just be an investor • External CEO and at least 50 % of board • Reduces emotional decisions • External perspectives

  11. END

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