This article was originally published on Kellogg Insight, a publication of the Kellogg School of Management at Northwestern University. It is used with permission.
It’s important to get everyone aligned on the motivation for the move.
Most family firms do what they can to maintain control of their destiny.
Still, some firms eventually find themselves at a difficult inflection point: considering whether to stay a private family business or to go public. These inflection points often occur around generational transitions, exit of family branches from ownership, or external events such as seismic shifts in an industry—and the difficulty of the decision is often compounded by the family’s close emotional connection to the business.
But even in the best of times, these decisions tend to be complicated.
“Going public as a family-owned business can open up Pandora’s box,” says Jennifer Pendergast. “You may start out by taking 10 percent of the shares public so the family still retains control, but you’ve opened the door to public ownership and all that comes with it.