Buy-outs of family/private firms represent a significant part of
the overall buy-out market in Turkey.When considered that 95% of
the companies in Turkey are family owned business, and most of them
seeking a safe fund, Private Equity Companies most probably will be
the best option for this kind of companies.
Advantages of family companies
There are some advantages of the family owned businesses that is
investing in would be profitable for the investor too, such as;
In family owned businesses both in establishment and
acceleration levels, mostly family members try to create fund by
putting up their profit share. Because their company name also
presents their honor, which means that the business and family name
are nested; they mostly consider future of the company compared to
profit that gained from the company. Therefore, due to this
sentimental view of family owned businesses, they can be experience
and motivation enhancer for the employer working in the company,
which is very important for the growth.
Dynamism: Because of bureaucracy pressure is less than any
other non-family businesses, the company gain dynamism. Therefore,
it is much easier to accommodate to changes and the new
opportunities may be evaluated more efficient.
Quick Decisions: Generally because decisions have been taken by
one person or one small family group there is a very fast decision
making procedure compared to more corporate firms.
The main pitfalls are lack of openness and control of the
Lack of Openness: There is a temptation of
keeping the business to the family in Turkey. Most family
businesses are tightly run by the family but very few outsiders.
Outsiders can work with the family but in general they are not at
the top of the company.
Control of the Company: For the family owned
business giving up the control would not be that easy. When you
think of that the owner who established the company and increased
the profit, the giving up idea could be a hard decision mostly in
the companies where business and family relations clasped to each
other very tightly. Therefore, management without
institutionalization of the family owned businesses can be
challenging for the PEs. (Private Equities)
In conclusion, family owned businesses have some pitfalls
however the organizational structure is simple, effective and
How to Add Value to a Family Owned Business
Family owned business have been struggling with sustainable
capital growth need decrease in profitability of the company, risks
and uncertainty. In order to solve such problems, determination of
efficient strategies, efficient use of resources has a significant
role in accordance with the growth in capital. Applicable
corporation policy must be determined in case of determination of
organizational and operational strategies, and application of the
strategies aimed at family owned companies, profitability increase,
determinations of Portfolio Company in conformity with the targets
that were set before. Within this is scope, benefiting from new
Capital Market Board (CMB) Communiqué which was prepared
accordance with Organization for Economic Co-operation and
Development (OECD) rules, would be very helpful to fill the gaps in
management of the company.
Even though family owned businesses have some pitfalls, private
equity companies may turn these into an advantage and make profit
by investing in these companies. Because family owned businesses
are seeking for fund, private equity companies are going to a
perfect capital if reconstruction of the family owned businesses
can be succeed in accordance with the institutionalization
principles foreseen both in Turkish and international legislations.
On the other hand, family values are important for the company
since business and family are nested as mentioned above. Therefore,
if PEs can recognize that value and work together for the common
good, family owned businesses can be the best competitive advantage
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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