Publications
Publications
- June 20, 2013
- Wealth Management (website)
The Tyranny of Minority Shareholders
By: Josh Baron and Henry Foley
Abstract
The article discusses challenges arising from minority ownership in the context of the proposed Empire State Building IPO. It emphasizes the complexities that minority shareholders can introduce in business decisions when families take their assets public. The article highlights lessons for owners of family businesses, showcasing scenarios where stock dilution occurs due to employee ownership or generational transfer. It emphasizes the importance of creating compensation systems that mimic ownership risks and rewards rather than outright distribution of shares. The challenges of having one family branch with a controlling interest while others hold minority stakes are also explored. The article provides options for business families to address such situations, including setting clear rules for share transfers and establishing governance structures to maintain family unity. It underlines the impact of minority ownership on business decisions and the potential consequences of not keeping shares consolidated. The Empire State Building IPO case is cited as an example of how minority shareholders can influence even well-planned decisions.
Keywords
Business and Shareholder Relations; Ownership; Family Ownership; Corporate Governance; Power and Influence
Citation
Baron, Josh, and Henry Foley. "The Tyranny of Minority Shareholders." Wealth Management (website) (June 20, 2013).