Thomas Ahlström September 2014
Governance and Education
• Creating the right preconditions for family company
survival
• Preparing the Next Generation
Survival rates of family companies (world wide)
Generation Survival percentage
2nd
30
3rd
10-15
4th
3-5
5th
1-2
6th
<0,5
The stakeholders
shareholders
debt
providers
employees
pressure
groups
The shareholder
– the most important stakeholder
Family
Private
Institution
Activist
Hedge
Fund
Raider
The family shareholder
- The Superstakeholder
“In a listed, or a privately held company, there is always a
possibility to exit, one way or the other, whereas the
fundamental idea about family ownership - in its purest form is to keep the company, own it as a going concern, and pass it
on to the next generation”.
The ”Golden Cage”
I can’t eat
my cake!
How does this effect governance?
If you can’t (or are not supposed to) vote with your feet –
you probably want to exercise influence over the company,
and ideally, in a much more rigourous way than the
average shareholder in the average company
Owner – management interest alignment?
Governance models
Multiple
families
Single family
Complexity³
1-2
generations
Several
generations
Annual General Meeting
Family assembly - Family council
Holding company – Supervisory board
Big Family - Big Challenges
Generation
Persons
Year of birth
4.
50
1930 - 1960
5.
147
1951 - 2002
6.
137
1980 - 2014
7.
6
340
2008 - 2014
The Ahlström family - direct involvement
• Some 340 family members including children and in-laws
• Widely spread share ownership, 230+ family shareholders
• The fifth generation has taken over at board level
• 13 family members serve on 6 different boards, some on 2 boards
• 6 family members are nomination board – or committee members
• 14 family members serve on the holding company supervisory board
• 3 family members are employed in two different companies
About 30 persons
How do you secure a generation shift
• Trust or foundation
• Family governance
• Traditions, mindset, education, agreed principles
• Controlled shift of power
At what point do you engage
the next generation?
Early!
Education
Courses
Mentoring
External evaluation
Factory visits
Finance
for family
business
Ahlström
Business
Academy I
Summer
Investor Day
Camp
Ahlström
Business
Academy III
Strategic thinking - Insead
Ahlström
Business
Academy II
Leadership today - MIT
Family business - IMD
Other external
External – private economy
12
18
”Equal opportunities”
General Education
30
”Based on track record and potential”
Specific Education
Age
How to get the Family Governance Working
- our case
1991
1994
1995
1996
1998
2002
First session, Professor John Davies, Harvard
Second session
First Family Document
Third session, Professors A. Lank & F. Neubauer, IMD,
Switzerland
Family Document 2nd edition ”Family Values and Policies”
Family Document 3rd edition
Governance & the Family Council
Family
General
Meeting
Family
Assembly
Board
Family
Council
Mgmt
Why do Family Councils fail?
• The Family Council is a ”fair weather” institution
• The power structure of the Family Council is
assymetric in relation to the Companies Act, and
Articles of Association
• It does generally not take into account share based
voting rights
• It is distant from the real corporate world
Back to the drawing board....
2010
Dr. Annelie Karlsson
2011
Fine tuning of the governance mode
2012-14 Changing the corporate structure
Ownership Structure 2014
Ahlström Family 230 shareholders
Diffuion
Antti Ahlström
Perilliset
Holding
OWNERSHIP ISSUES
Ahlström Capital
Private equity,
industrial investments,
real estate, forestry,
listed shares, cleantech
OPERATIONAL ISSUES
Ahlstrom plc
Munksjö plc
Fiber
Technology
Specialty Paper
Simplyfing a complex world
Social
Capital
Trust and
Respect
Vision, Mission,
Owner Strategy
Economic Capital
Intellectual
Capital
Holding Company
Operating Company
”And they lived happily ever after”
Thomas Ahlström