Optimizing the equity reassignment process: A novel application for family businesses.

Clicks: 283
ID: 15638
2019
Article Quality & Performance Metrics
Overall Quality
Not rated
Combines reader engagement with the AI quality analysis. This article has not been analysed, so there is no overall score — reader engagement is measured and shown alongside.
AI Quality Assessment
Not analyzed
Readership in this journal
Popular

Ranked #144 of 235 articles by views in Heliyon

Most read Least read

Bar heights use a square-root scale. Only the 120 most-read articles are drawn; the journal has 235 in total.

Mint this article as an NFT
Not yet minted

Create a permanent, verifiable on-chain record of this article on the Scimatic Network. The NFT is held in your Journament account, and you can withdraw it to your own wallet at any time.

5 SUSD one-off · no wallet required
Sign in to mint
Abstract
This paper aims to support the equity reassignment process of large family business conglomerates, which can be complex due to both the nature and number of companies involved and specific owner requirements. Addressing these issues is especially important in the context of family businesses, since a successful reassignment might resolve and prevent family conflicts.The paper presents a model that determines the optimal reassignment in terms of a specific owner's preferences. This model can also handle different types of requirements, including accounting for equity and intra-loan partition between owners and controlling for liquidity, capital structure, and transaction costs. The model also considers risk diversification for each member's fortune by considering the uncertainty involved in the future value of each firm, which can change at any point depending on industry and market conditions. The methodology not only finds the optimal solution in terms of a specific target, but it allows for post-optimal analysis so that owners can obtain important insights in terms of the costs involved in adding each requirement to the model.The model was successfully applied in a real case study. The tool played a primary role in identifying a new equity distribution for a family holding structure composed of 4 members and 26 companies. In the first step, the model derived an optimal solution in terms of the target chosen by the owners, but it did not fully satisfy all members. However, owners were able to come to a decision regarding final reassignment after doing a sensible post-optimal analysis.Previous research has focused on analyzing the special characteristics of family-run businesses and how they differ with respect to non-family-run businesses in terms of performance, governance, and management, among other things. However, this paper is the first referring to the process of ownership reassignment and to use an optimization model in its methodology. It is also the first study that bridges the gaps between the disciplines of portfolio optimization, corporate finance, and family business.
Reference Key
reus2019optimizingheliyon Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Reus, Lorenzo;
Journal Heliyon
Year 2019
DOI
10.1016/j.heliyon.2019.e02050
URL
Keywords Keywords not found

Citations

No citations found. To add a citation, contact the admin at info@scimatic.org

Comments

No comments yet. Be the first to comment on this article.