Equity new issues: Selling the family silver
Family businesses have long been the engine of European growth - if not of European stock markets. But the deaths of the founders and the need for capital are encouraging an increasing number of family businesses to list. Steven Irvine and other Euromoney writers analyze the trend and talk to six family companies being eyed by the bankers.
There are a lot of family businesses out there. In Germany, for example, 1.5 million companies, out of a total of 2.1 million, remain family-owned.
Traditionally, family businesses have not been very keen on the stock market. In Italy, for example, the preponderance of family-owned companies has kept the stock market small: its capitalization is 18% of GDP, compared with an OECD average of 50%.
But things are changing. Even in Italy, there were 10 new listings in 1995, primarily of family businesses. Why? Yoram Gutgeld, a specialist in family businesses at management consultant McKinsey, believes generational change is always the most important motivation.
"In a number of cases," he says, "the company was built in the 1950s by a great entrepreneur. But in the generation below, some are interested in the business, some are not. Floating stock resolves this problem."
Governments have also done their bit to encourage flotations. The former Berlusconi government in Italy passed the Tremonti law giving companies that listed in 1995 an attractive tax break - a reduction in corporation tax amounting to 16% annually for three consecutive years.
And, of course, some family companies are just desperate for capital.
Still, it would be an exaggeration to claim that family-owned companies are rushing to get themselves listed.