MAN2002 Family Business Management Session #3

 Session 3

  • The class started with a review of what a family business is: a company of any size is a family business if the majority of the decision-making rights is in the authority of the person who established the company or a relative. 

  • Separation between ownership and someone working in the company. Some people might have shares but don’t really work in the company or know how it works. 

  • Example: business in real estate in construction that has a lot of practical work. The father is the owner, married, the wife is not involved (emotionally or financially). Son lives in the US (engineer Prof), Daughter 1 (MBA, investment banker in London), Daughter 2 (MBA, consultant, Zurich). Son marries a woman who is an artist. Daughter 2 has r/s with an architect. IF the company is valued at 50M, 50% debt (financed through mortgage), they could divide 8M each and sell the company. Equity, common, preferred (5%), or convertible bond (5%). In the end, the son got bonds, if he decides to cancel the bond, it would not be good for the company. Son gets recurring revenues (could be to the benefit of the wife, who is an artist).

  • Bond is a liability, like a bank loan where they loan money to a business.


Safe financing documents: for early stage investments contract between a startup and an investor that gives the investor the right to receive equity of the company on certain events.


Equity financing: this Safe will automatically convert, letting you get  the better option before the next one. 

Liquidity event: safe is considered as shares and you make the share gain.

Dissolution event: when the company goes bankrupt/stops, gets part of it depending on share price

Liquidation priority: more or less losing your money

Termination: will terminate after compliance to the safe


Influence of the entrepreneur in the opportunity recognition (review), stay in touch with customers, take the added-value into account, cognitive framework to understand the marketing opportunities. Everyone sees it but not everyone sees the business opportunity. 


Learning ability of an entrepreneur is not just networking but also connecting information. Very important where you get data and info from. Always open and based on your own cognitive framework, absorb and analyze that information how it would influence your business plan. Neutral with politics, independent from the government in the sense that you can collaborate with all kinds of government.

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