guido corbetta chair aidaf-ey of strategic management in family business in memory of alberto falck...
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Guido Corbetta Chair AIdAF-EY of Strategic Management in Family Business
In memory of Alberto Falck
Helsinki, 19th September 2014
Long-lasting Family Business
Family Business is the most diffused form of capitalism in many countries
Country% of family businesses
Large sized or listed family businesses
BRASIL 90% * 70% of large sized groups
USA 80-90% ** 35% of Fortune 500 companies
CHINA 85% * 37% of listed companies
FRANCE 83%40% of the 250 biggest
companies
ITALY 82% 58% of large sized groups
GERMANY 79% 50% of listed companies
INDIA 67% 67% of listed companies
* Non listed companies. * * North America businesses. - 2 -
50
100
150
200
250
Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
Global family owned businesses Index MSCI World USD Index
Family Business may outperformnon family businesses
+133%
+65%
50
100
150
200
250
Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
Global family owned businesses Index MSCI World USD Index
Share price (Index: June-2003=100)
- 3 -
01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-1290.0
110.0
130.0
150.0
170.0
190.0
210.0
230.0
250.0
107.1115.3
131.3143.3
164.9
184.2195.2
177.7
203.4
224.9218.7
102.3 110.2120.1
129.9
144.4
158.5169.4
160.7
178.9
193.0 190.6
Familiari AUB Non familiari
Cumulated revenues growth
Source: AIDA database
Italian family companies
Italian non family companies
(Index: 2001=100)
Family Business may outperformnon family businesses
- 4 -
2003 2004 2005 2006 2007 2008 2009 2010 2011-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0,9
1.81.5
1.7
3.2
2.6
2.0 1.9
1.3
-0,4-0,2 0,2
-0,5
1.2
0,2
0,70,9
0,3
Familiari AUB Non familiari
(*) Average of the relevant industries based on all the limited companies in the AIDA database
Italian family companies
Italian non family companies*
Source: AIDA database
Return on Investment
Family Business may outperformnon family businesses
- 5 -
Family businesses may last for more than … 100 years (1/2)
- 6 -
Family businesses may last for more than … 100 years (2/2)
- 7 -
Family businesses may last for more than … 200 years
- 8 -
Generation Δ ROI Δ ROE Δ Growth
First generation +0,6 +2,1 +1,5
Second Generation =0,0 -0,4 = 0,0
Third and following generations -0,8 -2,5 -2,1
Data processing is related to the period 2000-2008
Source: Aida database
But Italian data confirm that the first generation builds, the second maintains
and the third...
- 9 -
Age of the leader % Δ ROI Δ ROE Δ Growth
Less than 40 years 7,5% -0,4 +2,4 +1,5
40-50 20,2% +0,3 +1,2 +0,9
50-60 26,0% -0,2 -0,7 +0,5
60-70 27,7% -0,2 -0,6 -0,9
More than 70 years 18,6% +0,4 -1,1 -1,2
And Italian data confirm that some experience is good, too much is bad
- 10 -
Data processing is related to the period 2000-2008
Source: Aida database
For all FBs:• Strong resistance to change of the senior
entrepreneur and managers• Nepotism• Conflicts between family members• Sub-optimal strategies (control versus growth)
Mainly for SME FBs:• Poor strategic management processes• Ambiguous organizational structure and
systems
We can conclude that there are some weaknesses and traps of family ownership
- 11 -
How to overcome weaknesses and traps ?
John Elkann’s ideas
Groups like ours typically go
through three stages in their
development:
a time of strength,
a time of privilege
and a time of vanity.
For me the first is the only one that
counts.
Giovanni Agnelli
- 12 -
• Conservative capital structure
(little/no debt)
• Frugality
• Diversification
How to overcome weaknesses and traps ?
John Elkann’s ideas
- 13 -
An ownership capable of supporting the enterprise with “patient” capital:
an owner family is a positive factor for an enterprise when
it’s capable of balancing its own short-term interests and
the enterprise’s long-term development
a conception of ownership that sees the enterprise as a
precious asset which, whilst being the property of a few,
must be managed with a deep sense of responsibility
towards all stakeholders and not just the majority
shareholders
How to overcome weaknesses and traps ?
Ermenegildo Zegna’s ideas
- 14 -
A corporate leadership capable of effective
entrepreneurial change: a selection process that strictly avoids the risk of
nepotism
Professional governance enabling talented non-
family (and family) directors and managers to be
attracted and retained: having a clear distinction of roles and responsibilities
between owners, directors and managers. In this context,
the make up of the board of directors with independents
deserves special attention- 15 -
How to overcome weaknesses and traps ?
Ermenegildo Zegna’s ideas
… Vision
… A bit of luck
… A lot of energy
- 16 -
How to overcome weaknesses and traps ?
Ermenegildo Zegna’s ideas
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