Why family businesses should tap into stock markets

As it were, family firms dominate the business landscape across many economies. They are major contributors to both employment and gross domestic product (GDP), accounting for over 50 per cent of private sector contribution to GDP in many markets (according to WFE’s survey) and range from micro-enterprises to some of the largest listed companies in the world. Recent news published by local media outlets confirms that about 10 families-run businesses’ control a relatively substantial part of the country’s private sector contribution to the GDP — in the process of their pursuing enterprising motives they generate wealth to their families while at the same time providing much needed jobs, paying taxes, facilitating the availability of goods and services that we somehow need for our living, supporting other businesses in their supply chain, etc.

Thus, one may find cases where a founder-owned-managed firm, characterized by a strong paternalistic outlook and distrust of outsiders, reluctant to list on a stock exchange — we face this challenge in our society today, since we established the alternative window for capital raising by Small and Medium Enterprises (SMEs), called the Enterprise Growth Market at the DSE about four years ago — there has not been any of the family-owned businesses that have considered to pursue this route. Actually, out of 21-domestic listed companies, only two can trace their background to family businesses. Our engagements with some families to consider raising capital via the stock market have so far been futile. However, we remain patiently optimistic that probably third-generation owned and professionally managed companies would consider going public, should listing be needed to sustain the long-term growth of their companies.

Why family businesses should tap into stock markets

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