Succession 2.0 – moving family companies through IPOs

Leti McManus and Dr Ariel Sergio Goekmen show how moving family companies forward through IPOs can be dovetailed with succession planning. In family-owned firms, an owner handing over responsibility to the younger generation and moving into a nonexecutive role is only a short-term measure. Times change fast, and family firms need to juggle family issues with an increasingly challenging business environment. Especially in multigenerational businesses, there are often schisms between passive owners and those actively contributing to success. Some family members may look to exit while others are keen to remain involved. There is also the question of whether the family should allow external parties (financial investors, strategic partners, etc) to come to the table.

Smaller Family Businesses do go Public

In March 2016, the son of the Watkin Jones family took their ninth-generation property development business (established 1791) public on the London Stock Exchange (LSE), with a market cap of GBP255 million. He opted for an initial public offering (IPO) because it would give the firm a greater profile and allow them to grow the business. In a post-IPO interview with the Daily Post, the son stated: ‘It also gives you a sense of purpose. If you are a successful business, how do you keep driving that business forward? You need a new challenge and you are under more pressure because you have to deliver, [you have] to keep getting better and coming up with ideas.’ The son became Group Managing Director in 2003 after 13 years with the firm. The father moved to be a board member until he retired right before the IPO. Read more