Family businesses can use stock market to organise succession, forum hears
July 02, 2014 00:00 By Pichaya Changsorn
The stock market can be an effective tool to help family businesses pass into the hands of family successors or professional managers, according to speakers at the "MAI Forum 2014" yesterday.
Prapan Charoenprawatt, president of the Market for Alternative Investment, said the MAI could be a good solution for family enterprises wanting to develop a good system, workforce and successors to carry on their businesses. A study shows that of the 97 companies listed on the exchange, 80 have grown from a family business.
As well, more than 10 MAI-listed companies have second-generation family owners who have taken over the business from their parents, he said.
Sombat Anuntarumporn, president of Interlink Communication, told the seminar that as a member of a Thai-Chinese business family, he wanted to pass the business to his children, especially his son. The coaching process began right after his child was born.
But being a listed company, Sombat said the firm could not just appoint a successor without gaining trust and support from its shareholders. Thus a few years ago he assigned his son Nuttanai to present a business plan to the shareholders. They were convinced, and agreed to appoint him to run a newly set-up subsidiary to pursue a new growth opportunity.
As part of the coaching process, Sombat said he had given full authority to his son, now 26, to manage the new subsidiary.
“Except in the case of severe mistakes, I have given my son a free hand to try things and learn, just as I tried many right and wrong things [in my entrepreneurial experience],” he said.“Fortunately, I might have a competent son. For 10 years, our market capitalisation had stayed at the Bt1-billion level. One year after he joined the firm, on the day that he announced the business plan, our market cap had jumped to Bt2 billion. Today, two years afterwards, our market cap has risen to Bt3.5 billion. And next year, he will list the [successful] subsidiary on the stock market. This is good luck for me and every shareholder.”
Kitipong Urapeepatanapong, chairman of global law firm Baker & McKenzie’s Bangkok office, said the stock market was a “crucial choice” for family-owned enterprises to prepare for the Asean Economic Community, which may result in many firms finding they will either be forming joint ventures with foreign partners or being bought by them.
Dr Somchai Thaisa-nguanvorakul, chairman of the executive committee of SNC Former, said that after considering the working conditions of the manufacturing company, he decided not to have his three daughters run the business.
“We have staff to succeed me as a ‘professional managers’ and I have developed my daughters to become ‘professional investors’. My daughters take care of our business as investors, while they also look into opportunities to invest in other people’s businesses such as banking and other industries that we can’t do by ourselves,” he said.