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Family businesses advised to list on NSE for perpetuity

For family businesses to survive and thrive even after the death of the original promoters, such business should pursue listing on the stock exchange and also ensure they have adequate capital to support their business activities, says Professor Morten Bennedsen of the INSEAD Business School and KPMG International

Bennedsen, who is also a Director at the Wendel International Centre for Family Enterprises, said listing the business on the stock exchange will help open up the business for fresh ideas and also in relinquishing total control, a key strategy in ensuring business survival.

He further stated that family businesses can survive for a very long period of time if the proper succession plan is put in place and effectively communicated to key stakeholders and the successor.

He noted that to effectively transfer family assets from one generation to other, it is necessary to establish common ground for all stakeholders, cultivate successors, draw up a proper ownership design and communicating the succession agenda.

Bennedsen explained that communicating the process will ensure that the successor see the process as fair and all-encompassing.

“Family businesses can boost their survival by relinquishing family control of the business by going public, reducing their stake in the company or by exiting the business,” he added.

He, however, warned that listing on the stock exchange comes at a cost and should be done after careful consideration of critical issues in the family and in the business.

According to him, going public is risky, especially if the family members are not united, and might provide an avenue for outsiders to take over ownership of the company.

He also cautioned that no one succession plan is appropriate for all family businesses, especially for Nigerian firms, noting that what is key is to find a Nigerian model that takes into account the many specific cultural and institutional roadblocks in the country.

Partner & Head, Transactions and Restructuring, Mr. Dapo Okubadejo, in his own view, harped on the need for communication, saying while most major risk factors are out of the control of most family businesses communication is one of the risks that can be controlled by the businesses.

According to him, we tend not to equate communications directly with risk management, yet it is one of the major impediments enhancing the numerous benefits that the family component can bring to the table.


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