A Listing Is a Tool, Not a Coming-of-Age Rite

Once a business reaches a certain size, the word “listing” begins to come up. Most people take it for a threshold: cross it, and the company has grown up, and the family has become respectable. What a listing changes first is who has been added to the shareholder register. Once the register changes, the rules for who has the final say in the family have to be rewritten.

July 1986, Frankfurt. The German tennis player Boris Becker had just defended his Wimbledon title, and the Puma logo on his shoes had been seen by the whole world. A few days later Puma listed on the Frankfurt exchange, in an issue that came to be called the “Becker rally.” The share price shot from an offer price of one hundred and thirty marks all the way to more than fourteen hundred. The man in charge, Armin Dassler, was the eldest son of the founder, Rudolf Dassler, and fifty-six years old that year.

The glory did not last. Becker’s contract obliged the company to pay him at least five million dollars a year for the next five years, plus royalties. Becker’s form then slid; he was said to have moved to Monaco to escape taxes and military service, and Germany’s affection for him evaporated overnight. Retailers said the Becker line would sell far better without his name on the shoes. The contract became a liability that snowballed. Three years later the shares fell into the hands of the creditor, Deutsche Bank, and were sold off whole to outsiders.

From that day on, the family that founded the company did not hold a single share on its register.

The shareholder register is a document that actually exists. A listed company entrusts it to a share registrar; who holds how many shares is updated with each trade, and under the rules it can be inspected. Before the listing, the only names on it were the family’s own and a few old associates’. After the listing, the names multiply by the day, and of the new ones the family does not know a single person.

Before and after the listing

When Kikkoman’s eight soy-sauce brewing families merged into a single company, they held nearly all of its equity. To raise money for rebuilding after the war, the company listed on the Tokyo Stock Exchange in 1949, and from then on came round after round of new share issues, employee shareholding and the entry of institutions, until today the eight families’ direct holdings, added together, are estimated at a single-digit percentage. The company is still called Kikkoman. What holds it is the market.

Jean-Louis Dumas, the fifth-generation head of Hermès, took the company onto the Paris Bourse in 1993, with the family keeping about seventy-five percent of the shares and the votes. At a shareholders’ meeting he said: “The money can come from the market, but the soul must belong to the family.” That seventy-five percent was scattered among more than two hundred descendants, each holding a little, and on the secondary market it could be bought away a little at a time. A dozen or so years later, that is exactly how Bernard Arnault, the owner of LVMH, got in.

The day after the Chinese video site Tudou filed its application with the US Securities and Exchange Commission, the former wife of its founder, Wang Wei, sued for a division of property, the court froze the Tudou shares in his name, and the listing stopped. That was November 2010. Twenty-eight days later its rival Youku got to New York first, rising one hundred and sixty-one percent on its first day to a market value above three billion dollars. Tudou did not list until August of the following year; it fell on its first day, at a market value of a little over seven hundred million dollars, and a little more than half a year after that, Youku acquired it.

The ones who said no

When the three siblings of the Mars family’s third generation took over in 1973, the first principle they laid down was this: Mars would go on as a private family company and would never raise money by listing, so that no outsider could reach into the family’s control of the company. Later, Pamela Mars of the fourth generation repeated it at a family business forum: “However the times may change, we will never take Mars public.” In 2018, Stephen Badger, then chairman of the board, told a reporter that the advantage was knowing who your shareholders are: if you really had to hold a meeting, a small room would be enough to hold them all.

Lee Man Tat, third-generation head of Lee Kum Kee, said more than once in his lifetime that Lee Kum Kee would not list. Without a listing, the circle of ownership is all family; no outside shareholder presses for results every quarter, and only then can each clause of the family constitution carry the final word within that circle. Tao Huabi, founder of the chili-sauce maker Lao Gan Ma, put it more bluntly. In an interview with Guizhou Radio and Television she said: “Not only me. I am going to teach my sons and my grandsons: no loans, no outside stakes, no fundraising, no listing. That is the good way. However much money I have, that is how much business I do.” Mao Zhongqun, founder of the kitchen-appliance maker Fangtai, did a different sum: unlisted, he only had to persuade himself that growing twenty percent a year was enough; once listed, the board would want at least twenty-five, and he did not want noise interfering with Fangtai’s strategy.

Not listing does not mean not spending big. In 2008 Mars paid twenty-three billion dollars for the chewing-gum maker Wrigley. About eleven billion of that was Mars’s own money; Goldman Sachs lent five point seven billion, Berkshire lent four point four billion and put up a further two point one billion for a minority stake in Wrigley, the subsidiary. Not a cent came from issuing new shares, and what Berkshire received was Wrigley stock only; it never entered the Mars shareholder register. When LEGO was at its lowest, in 2003 and 2004, it was burning about a million dollars a day, with debt approaching eight hundred million; what held the family up was the non-toy assets in the hands of its holding company, KIRKBI, not any securities house.

LEGO’s Kristiansen family keeps seventy-five percent of the equity in KIRKBI; the LEGO Foundation holds the other twenty-five. A family member who wants out can sell his share back to KIRKBI and take the money, without disturbing overall control and without forcing the company to list for the sake of liquidity. IKEA’s founder, Ingvar Kamprad, went further and placed the core business inside a foundation; a foundation has no shareholders in law, and by its very structure the retail arm is all but impossible to sell or to list.

India’s Tata Group has more than twenty listed companies beneath it, yet Tata Sons at the top has never listed to this day, and about two-thirds of its shares belong to a set of charitable trusts. In 2004 Tata took its software company TCS public, raising one billion one hundred and seventy million dollars, the largest listing India had seen; the money went to buy more shares, lifting Tata Sons’ stakes in the operating companies past the twenty-six percent veto line, since under Indian company law a holding above one quarter can block a special resolution. In 2022 the Reserve Bank of India placed Tata Sons on the list of companies required to list. Tata’s answer was to repay more than two hundred billion rupees of debt and apply to surrender its license. This September the central bank rejected the application and told Tata Sons to list according to the rules. The fight in which the family would sooner dismantle its leverage than give up its ownership structure is not yet over.

Who can issue new shares

Li Ka-shing’s Cheung Kong Holdings caught the Hong Kong bull market and listed in 1972 at three Hong Kong dollars a share, heavily oversubscribed. Once he had listed stock, the way he bought buildings changed. In December of the following year, Cheung Kong used newly issued shares to acquire two commercial buildings, on Queen’s Road Central and Des Voeux Road Central, adding eight or nine million Hong Kong dollars a year in rent; the sellers took the shares and became Cheung Kong shareholders themselves. Over the next ten years, deals of this kind, shares for buildings, happened again and again. Forty-odd years later, Cheung Kong and Hutchison Whampoa were reorganized, the property going to one new company and the other businesses to another, with the family holding shares in each.

Chow Tai Fook Jewellery listed in Hong Kong in December 2011 at fifteen Hong Kong dollars a share, raising fifteen point seven billion, with the Cheng family in control through two offshore trusts, layer upon layer. How much the family holds once you look through the layers is a figure on which the public reports do not actually agree; what is certain is that at the top of the chain of control sit those two trusts. The family trust above supplies long-term commitment; the listed company below supplies transparency and liquidity. This two-track arrangement looks as though it has the best of both, on the condition that the family holds the boundary between the trust and the listed company.

In the 2024 financial year, New World Development, also the Cheng family’s, lost about nineteen point six billion Hong Kong dollars, the largest loss since its founding in 1970, with consolidated net debt of about one hundred and twenty-three point seven billion. The market’s questions were aimed not at one company alone but at the family behind the trusts.

The 2010 battle over the electronics retailer Gome can be read in two shareholder meetings alone. At the annual general meeting on May 11, the founder, Huang Guangyu, voted down the three directors nominated by the American private equity fund Bain Capital. Huang had by then been in detention for more than a year, and a week later he was sentenced to fourteen years; the chairman, Chen Xiao, had brought Bain in the year before and issued share options to the executives. That same evening, the board reappointed all three, on the ground that the vote had failed to reflect the true will of the majority of shareholders. The men the shareholders’ meeting had just voted out came to work the next day as usual.

Huang had one card left. The board held a “general mandate,” granted earlier by the shareholders, that let it issue new shares of up to twenty percent without going back to ask; a few rounds of that in succession and his thirty-odd percent would be diluted until he had no say. At the extraordinary general meeting on September 28 he put five motions. Removing Chen Xiao and replacing the directors both failed; only one passed: the revocation of that general mandate. From then on the board could issue no new shares, his percentage held, and with the family still owning more than three hundred stores that had never been put into the listed company, Chen Xiao resigned half a year later. Once a company is listed, who can issue new shares matters more than who holds the most.

The road back

In October 2023 the Rothschild family’s holding entity completed a buy-out at forty-eight euros a share and took Rothschild & Co off the Paris exchange, in a deal that valued the company at about three point seven billion euros; its shares had traded publicly in Paris for more than a century and a half. The reason the delisting notice gave: the group’s businesses no longer needed to raise funds on the public market, and as a private company it could better concentrate on the long term, without having to answer the capital market’s pressure for short-term results.

In 2013 Michael Dell joined with a private equity fund to take the company he had founded private, at thirteen dollars and sixty-five cents a share, more than twenty-four billion dollars in all; the announcement put it that only as a private company could it keep executing a long-term strategy that needed time and patience. Five years later Dell returned to the New York exchange, with a first-day market value of about thirty-four billion dollars, more than it had cost to take private.

There are also those who tried to go back and could not. At the end of 2008, Richard Li, Li Ka-shing’s second son and chairman of PCCW, together with China Netcom, proposed taking PCCW private; the offer was raised to four dollars fifty a share, and some long-standing shareholders still would not accept. Before the shareholders’ meeting, David Webb, Hong Kong’s independent stock commentator, received an anonymous tip that someone was giving PCCW shares to insurance agents and asking them to vote for the privatization. The Court of First Instance approved the scheme; the Securities and Futures Commission appealed; and in April 2009 three judges of the Court of Appeal unanimously overturned the ruling: a voting process like this could not satisfy the court that the vote had been fair. The privatization did not go through. PCCW stayed listed.

In recent years more have taken the road back. In 2025, twenty-nine listed companies in Hong Kong completed privatizations; Hang Seng Bank, fifty-three years after it listed, was taken private by HSBC at a thirty percent premium and delisted this January. Low valuations, thin trading and the cost of staying listed are the three reasons most often given in this round of delistings.

The thread these families share

Mars, Lee Kum Kee, LEGO and IKEA chose not to list, and each solved the liquidity and funding problems of staying private with a structure of its own; Tata Sons is still resisting a listing today. Ford, Hermès, Li Ka-shing and Chow Tai Fook chose to list, and when they did, they settled the vehicle for control before the prospectus; where the boundary held, the family remained the major shareholder. Rothschild and Dell listed and then went back, and the reason for going back was the same in both cases: the public market no longer priced what they wanted to do.

In all three approaches, the trouble came from the same place: the shares had scattered, and no one had twisted the scattered shares back into a single voice. The two hundred-odd Hermès descendants, the Dassler shares that fell into a bank’s hands, the eight Kikkoman families diluted to single digits, all of it comes down to this one line.

Two more things need saying plainly. First, a listing is not the same as cashing out. The new rules on share reductions that took effect in the A-share market last year state that when a company’s share price has fallen below its offer price or below net assets per share, or when its dividends over the past three years have come to less than thirty percent of average annual net profit, the controlling shareholder and the actual controller may not sell down in the market. Cashing out after a listing is not automatically available.

Second, the Hong Kong and STAR Market versions of weighted voting rights will not save a family. Weighted voting rights mean more than one vote to a share. The Hong Kong exchange and Shanghai’s STAR Market introduced them a few years ago, one after the other, but in both the beneficiary must be a sitting director in person; the rights can be neither inherited nor transferred, they lapse the moment the holder steps down or dies, and they protect the founder’s generation only. Ford’s kind of Class B shares, which descendants and family trusts can hold, do not exist under either set of rules. For a family to keep its grip on a listed company across generations, what counts is still the controlling stake, the family holding platform, the acting-in-concert agreement, and shareholding through a trust or foundation. An acting-in-concert agreement is an agreement among family members to vote together and to give the family first refusal when shares change hands.

Professor Joseph P. H. Fan of the Chinese University of Hong Kong tracked more than two hundred listed family companies in Hong Kong, Taiwan and Singapore: from five years before the founder handed over to three years after, their market value evaporated by about sixty percent on average. His explanation is family infighting, a second generation not ready, and a founder’s connections and reputation that will not pass on. All three happen just as readily in families that do not list. The difference is that a listed company has a public scoreboard, and every bout of infighting is priced by the market the same day.

How to use a listing

First, establish the funding need, then choose the way to finance it.

Raising money by listing is, after all, only one way of raising money. Work out first how much what you mean to do will cost, and where the money will come from. Tata’s way is to list the subsidiaries and keep the parent private, and to use the proceeds to increase its holdings; Mars and LEGO rely on retained profits and the holding company’s investment portfolio, and in decades have not asked the public market for a cent. When the money is not needed, all a listing buys is strangers on the shareholder register.

Second, fix the vehicle for control before listing.

There are four vehicles to choose from:

• a controlling stake, the most direct and also the most expensive;
• a family holding platform, which first gathers the shares scattered across the branches into one company or one trust, so that to the outside world there is a single shareholder;
• an acting-in-concert agreement, in which family members agree to vote together and to give the family first refusal when shares are transferred;
• dual-class shares: when the Ford family listed in 1956 it wrote Class B shares that descendants could hold into the corporate charter and printed them in the prospectus, and they have passed down five generations; the weighted voting rights of Hong Kong and the STAR Market protect only the founder himself.

Whichever is chosen, it must be finished before the prospectus is finalized. Try to gather the shares back in after listing, and the market sets the price.

Third, sign a family shareholders’ agreement before listing.

The agreement sets out three things:

• restrictions on the transfer of family members’ shares, and the pace at which they may be sold down;
• the equity arrangements for spouses and children, walled off by prenuptial agreement or by trust;
• the procedure for handling disagreements within the family.

When Tudou stopped in November 2010, the day after its application was filed, it was the second of these that stopped it.

Fourth, keep strictly to the boundary of the listed company.

That the family holds shares, and that a family member sits as chairman, changes one thing not at all: the company’s money belongs to all the shareholders. Related-party transactions must be disclosed and reviewed by the rules; the positions and pay of family members must stand up to publication in the annual report; and what has been settled at home cannot decide for the other shareholders. Once the boundary blurs, what the market is looking at is no longer one company but the whole family.

Fifth, plan the path to delisting in advance.

The usual route to privatization in Hong Kong is the scheme of arrangement, a plan approved by the court and binding on all shareholders. Its threshold: more than three-quarters of the disinterested shareholders voting (the party proposing the privatization excluded) must approve, and the votes against must not exceed ten percent of all disinterested shares. The usual practice in comparable American deals is to set up a special committee and obtain the consent of a majority of the minority shareholders. The PCCW failure shows that the decision to delist rests with the small shareholders and the court. Do that sum before listing, and afterward the company will not be trapped in a place it no longer needs to be.

A closing thought

Forty years have passed since that listing in 1986. In January 2026, China’s Anta announced a plan to buy twenty-nine percent of Puma for about one point five billion euros; if the deal is completed, Anta will become Puma’s largest single shareholder. In the whole transaction, the Dassler family that founded the company is not present by so much as a name.

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Case sources: The Town That Looked at Shoes: Adidas, Puma, and the Unmaking of the House of Dassler; Eight Families, One Brew: Kikkoman’s 360-Year Experiment in Restraint; The Saddle Stitch: Six Generations of Hermès and the War for Its Soul; The Candy Empire That Refused to Go Public; A Bottle of Sauce and a Book of Law: Five Generations of Lee Kum Kee; The House That Burned Three Times: Four Generations of the LEGO Dynasty; Leaving IKEA to the World: The Kamprad Family’s Long Game; A Bowl of Milk and an Empire: 158 Years of the House of Tata; Where the Long River Flows: Li Ka-shing and the House He Divided; Chow Tai Fook’s Gold, New World’s Debt; The House of the Green Shield: Five Arrows and the Rothschild Lock; The Watch Still Runs: Five Generations of Fords and the Art of Repair

Other sources: the 2010 battle for control of Gome (China News Service, September 21, 2010, and other public reports; first-instance judgment in the Huang Guangyu case, Beijing No. 2 Intermediate People’s Court, May 18, 2010); the delay of Tudou’s listing (reports in China Business News and the Economic Observer, 2010 to 2011); interview with Tao Huabi of Lao Gan Ma (Guizhou Radio and Television, Dongjing Guizhou, reprinted by Jiemian News); interview with Mao Zhongqun of Fangtai (Feng Lun’s Fengmaniu, April 2018, reprinted by Sina Finance); interview with Mars chairman Stephen Badger (Business Insider, June 2018); the financing of Mars’s acquisition of Wrigley (Wrigley press release, filed with the US Securities and Exchange Commission, April 28, 2008); the Dell privatization (Form 8-K filed with the US Securities and Exchange Commission, February 5, 2013); Tata Sons and the Reserve Bank of India (Business Standard, September 2026); Chapter 8A of the HKEX Listing Rules; Shanghai Stock Exchange STAR Market Listing Rules (2019); China Securities Regulatory Commission, Interim Measures for the Administration of Share Reductions by Shareholders of Listed Companies (2024)

Academic references

• Joseph P. H. Fan (2012) Guanjian Shidai: Zouchu Huaren Jiazu Qiye Chuancheng zhi Kun [The Critical Generation: Breaking Free of the Succession Trap in Chinese Family Businesses], Dongfang Publishing House
• Joseph P. H. Fan, Ming Jian & Yin-Hua Yeh, Succession: The Roles of Specialized Assets and Transfer Costs, SSRN Working Paper 1101405
• Ronald C. Anderson & David M. Reeb (2003) Founding-Family Ownership and Firm Performance: Evidence from the S&P 500, Journal of Finance 58(3)
• K. J. Martijn Cremers, Beni Lauterbach & Anete Pajuste (2024) The Life Cycle of Dual-Class Firm Valuation, Review of Corporate Finance Studies 13(2)