Publicly-Traded Firm Asks: Should We Be Known As A Family Business?
We're a publicly traded family business. My father was chairman for many years, and now he's stepping down. Although I am succeeding him, some of our outside directors and non-family executives question whether we should continue to promote ourselves as a family business. The family owns a substantial portion of the business and a sizable majority of the voting shares. What do you think?
While family businesses sometimes are perceived as unsophisticated by individuals who stress Wall Street's growth mantra, we believe that committed ownership for long periods of time typically benefits the business and its shareholders. Consider the following evidence:
Research measuring the financial result of comparable publicly-traded businesses found that family-controlled companies significantly outperformed those with dispersed ownership.
Mutual funds and stock indexes built with a bias toward selection of family-controlled businesses have outperformed general stock market indices not only in the U.S. but in European stock markets as well.
Family-controlled companies achieve their relatively better performance with less risk. Because they accept less risk, they are sometimes less aggressive.
Surveys of consumers consistently find that businesses viewed as family controlled are perceived as better to do business with.
Because they are less likely to sell out, family-controlled business stock prices are often lower than those of comparable companies and experience less volatility.
Many major publicly-traded firms proudly display their family connection. Wal-Mart is chaired by Robson Walton, founder Sam's son. Ford is chaired by the great-grandson of Henry Ford. Marriott, Anheuser-Busch, Wm. Wrigley & Co. and many others fly their families' names and prosper under multiple generations of family control and leadership. The publicly-traded New York Times Co. flagship New York Times owes its quality and independence to Ochs-Sulzberger family control and leadership. Anyone who has ever bought a share of New York Times Company stock, explains Vice-Chairman Michael Golden, a great grandson of dynasty-founder Adolph Ochs, knew or should have known about the family's involvement in the business. They invested not only in the business, but in the family.
Combining stock market accountability, liquidity and discipline with family commitment and stewardship combines the best of the worlds of public and private business. For a publicly-traded, family-controlled company, denying either would be to reject a significant advantage.
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