The Banking and Stock Exchange Committee of the Businessmen Association discussed some mechanisms for listing family businesses in the Egyptian Stock Exchange to maintain their continuity.
Hassan Hussein, Chairman of the Committee, said that the majority of family businesses in Egypt face a problem in their continuity after the second generation due to the multiplicity of heirs who own the company, and therefore the majority of family businesses do not continue after the second generation.
Hussein said during a videoconference meeting organized by the committee with officials of some family companies, that the lack of restriction of these companies is caused by the owners’ preference for borrowing for financing, and often the projects of these companies are based on self-financing through partners.
Hussein explained that attracting family businesses to the stock exchange needs to raise awareness of the importance of preserving these large entities, changing the prevailing culture around searching for funds necessary to establish projects, and consolidating the idea of dealing with the stock exchange to obtain it, as one of the methods that guarantee the preservation of economic entities.
He pointed out that evaluating companies for offering on the stock exchange has two main ways, either through the company’s cash flows, which is very suitable for companies dealing with banks, or evaluating the company’s assets at the current price.
He stated that if the company’s assets are evaluated in a fair manner, some of its assets can be separated and transferred to a separate project, ensuring its preservation and development as well, and reducing the obstacles of the offering.
He referred to 3 steps for family businesses that must be activated before the offering on the Egyptian Stock Exchange, which is to be a joint stock company, appoint a trusted financial advisor, and appoint a legal advisor to discuss the company’s situation before and after the offering.
The article “Businessmen Association” discusses the mechanisms of offering family companies in the stock exchange was written in the stock exchange newspaper.