Family and Finance
- some perspectives
Andreas Widegren
Department of Business Studies;
Uppsala University
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Disclaimer
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.
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Andreas Widegren
Current
• Head of Section – Capital Markets Policy Strategy
Swedish 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
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Case
• Company founded in 1974
• Three founding partners
• Great expansion:
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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”
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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
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Pecking order of finance
• Family and friends
• Bank
• Private placement
Capital Market
Experience &
Requirements
• Equity Capital Markets
• Debt Capital Markets
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These issues were identified early on
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Alternatives
• Family run
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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
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Alternative
• Owner
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Trade-off between investors and family
Stakeholder perspective
Long term perspective
Members not necessary operational (optional)
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Independence between firm and personal economy
Choice to be investor or to leave
Avoid dependence on certain individuals
Faster adaptation to changing environment
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Consequences
• Fostered as owners
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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
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END
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