Happiness is Stock Liquidity

 

Happiness is Stock Liquidity

It’s One of the Keys to Keeping the Peace

with Inactive Shareholders in Later-Generation Companies.
Here’s how you can Track Stock Value on a Continuing Basis and set up a Stock Redemption Program

by François M. de Visscher

The lack of liquidity options is the most frequently cited source of unhappiness among passive family shareholders. The demands of these shareholders frequently escalate in later generations at just about the time when larger family businesses have opportunities to expand or a need to diversify and require infusions of capital. At precisely the time when third- and fourth-generation shareholders are coalescing as a force to be reckoned with, management is resisting their demands for liquidity, setting the stage for family conflict. Under the emotional strain of being badgered for liquidity and constantly second-guessed, the managing shareholders often throw in the towel and sell the company, more out of frustration than rational choice. The collision of interests often damages family relationships irreparably. More…

Seven Habits of Highly Effective Companies

Seven Habits of Highly Effective Companies

Attention to Sound Financial Practices -and to Sharholder Value – are what Separate the Best from the Rest
by François M. de Visscher

Why do some family firms thrive while others merely survive or even wither away and die? Many reasons, of course. However in my experience, successful family firms are distinguished by their attention to sound financial strategies and practices. To borrow a phrase there are seven financial habits in particular that separate the best from the rest.

1. Successful family firms establish effective financial and governance structures that separate family issues from business issues.
Family councils, family holding companies, shareholders’ assemblies where such forums exist, family members know there is a time and a place to discuss family matters related to the business. The board of directors can then focus on strategic issues and the pursuit of long-term shareholder value. Its time is no longer consumed by family issues (and sometimes quarrels) that should be resolved elsewhere. Likewise, when such structures are in place outside board members can be more easily selected on the basis of “functional fit” – that is, on experience and vision that complements that of the family board members, rather than on just a friendship or social obligation. Outside board members often add value because they come from backgrounds in public companies, where maximizing shareholder value is a primary mission. More…