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From Family Businesses to Business Groups

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Understanding Family-Owned Business Groups

Abstract

Passing on to the analysis of the various types of aggregations that can be found in practice, these divide into aggregations between juridically independent companies that are linked by various forms of relationships, and intracompany aggregations, that is, several economically interdependent units are constituted within the same company (single juridical subject). It is certain that the company business group has one characteristic that distinguishes it from other company configurations in business: in fact, it is constituted by a plurality of enterprises, most of which are autonomous, but at the same time, it has a leader company that holds control of all the enterprises making up the aggregation itself.

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Authors and Affiliations

  1. Link Campus University, Rome, Italy

    Manlio Del Giudice

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  1. Manlio Del Giudice
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Notes

Notes

  1. 1.

    However, there are cases where the existence of the economic subject is independent of the possession of the majority of votes in the assembly: controlled by quotas of capital less than 50%; control without direct or indirect investment of capital.

  2. 2.

    The OPA can be consensual (offer following previous private contracting that led to holding more than 30% of the voting rights of a company, imposes the formulation of an offer for the total shares still in circulation) or aggressive (irrevocable public offer for a minimum quantity of shares at a preestablished price with the scope of obtaining a majority share position in the “target” company). The offeror may envisage specific conditions—for example, reaching a minimum quantity of shares—that must be met for the offer not to be withdrawn. Besides OPAs, there are Offers of Public Exchange that foresee an exchange of shares carried out on the stock exchange. The offering company proposes to holders of shares in the “target” company, an exchange of those shares for its own shares; the Offer of Public Acquisition and Exchange that forsees payment for shares in the “target” company being made partly with money and partly with shares.

  3. 3.

    If the founder has 100% and there are only two heirs, neither of the two has control, unless they have a greater participation than their co-heir, who may have compensation through the assignation of family goods external to the company.

  4. 4.

    Recourse to a family holding allows safeguarding the control of the family business, through the creation of true “strongbox” of the family business assets, in which it is easier to regulate and, in certain cases, block the transfer of family participation. In cases where there is high fragmentation of the capital quotas possessed by family members, finding simple and effective methods that guarantee a unity of direction in governing the company is an indispensible condition for continuation of the family business.

  5. 5.

    Transfer pricing makes it possible to transfer resources from one company to another, at an international level, adding to the private benefits of control or, more simply, in multinational groups where the shareholders of the holding are widely dispersed, limited to making fiscal arbitration that in any case reduces the resources of the company in countries with higher levels of taxation.

  6. 6.

    Corrections can be made to the components of the EVA so as to identify a NOPAT and a CI exclusively connected to the operative activities, that is, purified of the sums that do not regard the characteristic management of the enterprise.

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Del Giudice, M. (2017). From Family Businesses to Business Groups. In: Understanding Family-Owned Business Groups. Palgrave Studies in Democracy, Innovation, and Entrepreneurship for Growth. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-42243-5_3

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