Family businesses: the future lies in opening up the share capital

To explore the evolution of governance in family businesses and its role in growth, the opening up of share capital and changes to ownership structures. This is the aim of the new white paper “Opening up capital in family businesses: how to prepare for the arrival of an investor”, produced as part of Governance 4 Change. The project was promoted by Legance, an Italian law firm with over 400 professionals, in collaboration with the School of Management at the Politecnico di Milano. The study was presented at the event “Building the Future: Business, Family and the Market”, which took place on 22 September in Rome, at the Circolo Canottieri Aniene.

“The opening up to external capital and managers is a growing phenomenon that is reshaping Italian family capitalism, with decisive implications for business competitiveness and generational succession,” explained Josip Kotlar, full professor at the School of Management at Polimi. In this process, according to the professor, it is crucial to start laying the groundwork for change within the family, even before meeting the investor.

During the proceedings, the essential role of family-run businesses in our economic fabric was emphasised. According to Barbara Cimmino, vice-president for Exports and Investment Attraction at Confindustria, ‘they are deeply rooted in their local communities, build expertise, create jobs and showcase the quality of “Made in Italy” to the world’. The real challenge today, as Cimmino emphasised, is precisely to enable family-owned SMEs to grow and remain competitive without losing their identity: ‘Family-owned businesses must be able to combine their identity with new tools for growth – from opening up their capital to industrial partnerships – without losing the distinctive values that have made them successful.’

As Kotlar emphasised, clarity is essential for the process of opening up to external capital to be successful. It is necessary to establish from the outset ‘which decisions will remain with the family and which will be shared with the new partner’. Only in this way, in fact, is it possible to build a relationship between family shareholders and institutional investors ‘based on a shared business vision’.

Andrea Sacco Ginevri, a partner at Legance, also emphasised the importance of successfully guiding family-run businesses along a path of sustainable growth and market integration. In this regard, according to Ginevri, ‘the very recent reform of the Consolidated Law on Finance has taken bold and innovative steps to facilitate private companies’ access to the stock market whilst at the same time preserving the listing status of SMEs that are already quoted’.