Sök

Protection of ownership in family firms: Post-sale purchase clauses and management perspective

PublikationArtikel (med peer review)
Familjeföretag, Företagandets villkor, Lars-Göran Sund, Per-Olof Bjuggren

Sammanfattning

In many small and medium sized family firms of corporate form there is a desire to protect ownership structure through restrictions on transferability of shares. At first sight this can appear strange as one often mentioned advantage of the corporate form is that it provides for high transferability of shares whereby a large amount of equity easily can be accumulated. But looking around in the real world, most family firms are not listed and have an interest in the control of changes in ownership structure through clauses that restrict transferability of shares. In this paper this interest of control of ownership is taken for granted. The focus is instead on providing a contractual analysis of the pros and cons of different clauses that restrict transferability. What do the spectra of restricting clauses look like? In what transferability situation can it be more efficient to use a certain clause? Does it matter if a person controlling the use of the firm’s assets has a majority ownership and/or is the manager of the firm? We further focus on the impact on management of post-sale purchase clauses, which are common only in the Nordic countries and thereby provide an indigenous perspective. How do succession matters enter into the picture? These are the type of questions that this paper aims to provide answers to. In the description of clauses the Swedish situation is the base case with a short discussion on how Sweden differs in this respect or is similar to the rest of the world.

Bjuggren, P-O., & Sund, L-G. (2012). Protection of ownership in family firms: Post-sale purchase clauses and management perspective. European Journal of Law and Economics, 33(2), 359–370. DOI: 10.1007/s10657-010-9173-z

Baserat på innehåll

Ownership restrictions, and team consideration in family-owned businesses
Artikel (med peer review)Publikation
Bjuggren, P-O. & Sund, L-G.
Publiceringsår

2011

Sammanfattning

At the start of a new business both team and risk aspects have to be considered in the choice of business form. The partnership form offers advantages in terms of team considerations while the corporate form provides limited liability which provides a way to handle the risk problems associated with owning a firm. The advantage of having a well synchronized team is important for many new firms and especially for cases where family relations are considered important. Seen from that angle the partnership form should be opted for. But risk is high up in the mind of founders. Events might unfold in an unexpected way and in the process the economy and well being of the family is at stake. The corporate form with limited liability is in this sense a very attractive choice that is commonly chosen. But with the corporate form comes transferability of ownership of shares without consent of other owners. The shareholder team might therefore change in an unexpected and unwelcome way. Therefore it is important to consider different types of transfer restrictions when a new corporate form of business is started. This aspect has not been much considered in practice and in the entrepreneurship literature. An accountant or a lawyer often has to remind an entrepreneur of the importance of stability in ownership positions. In the paper we attempt to ascertain whether it is possible to foresee future complications and thus prepare already at the start of the business. The paper combines law and economics analysis of the different transfer restrictions found in various legal systems.

Protection of ownership in family firms: Post-sale purchase clauses and management perspective
Article (with peer review)Publikation
Bjuggren, P-O. & Sund, L-G.
Publiceringsår

2012

Sammanfattning

In many small and medium sized family firms of corporate form there is a desire to protect ownership structure through restrictions on transferability of shares. At first sight this can appear strange as one often mentioned advantage of the corporate form is that it provides for high transferability of shares whereby a large amount of equity easily can be accumulated. But looking around in the real world, most family firms are not listed and have an interest in the control of changes in ownership structure through clauses that restrict transferability of shares. In this paper this interest of control of ownership is taken for granted. The focus is instead on providing a contractual analysis of the pros and cons of different clauses that restrict transferability. What do the spectra of restricting clauses look like? In what transferability situation can it be more efficient to use a certain clause? Does it matter if a person controlling the use of the firm’s assets has a majority ownership and/or is the manager of the firm? We further focus on the impact on management of post-sale purchase clauses, which are common only in the Nordic countries and thereby provide an indigenous perspective. How do succession matters enter into the picture? These are the type of questions that this paper aims to provide answers to. In the description of clauses the Swedish situation is the base case with a short discussion on how Sweden differs in this respect or is similar to the rest of the world.

Working Paper No. 181. A Contractual Perspective on Succession in Family Firms
Working paperPublikation
Bjuggren, P-O. & Sund, L-G.
Publiceringsår

2011

Sammanfattning

Abstract This paper analyses succession in family firms from a contractual perspective. A firm is regarded as a nexus of contractual relations with owners, employees, suppliers of goods and services and customers. These contractual parties are in differing degrees tied to the firm through asset specificities. Succession can affect the value of such assets. In this sense they become stakeholders with vested interests in the succession process. The theoretical discussion of affected stakeholders is backed up by a survey study of 143 Swedish family-owned businesses that have been subject to succession. The results show that the opinions of close shareholders such as family members and incumbent mangers as well as those of other stakeholders such as suppliers and customers are important.

Related content: A contractual perspective on succession in family firms

Visa fler

Ratio är ett fristående forskningsinstitut som forskar om hur företagandets villkor kan utvecklas och förbättras.

Sveavägen 59 4trp

Box 3203

103 64 Stockholm

Postgiro: 382621-1

|

Bankgiro: 512-6578