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2. Providing liquidity to shareholders

The stock market enables the owners of a company to quickly realise the capital invested in the business. The old shareholders, many of them founders of companies, find in the stock exchange the counterparty which enables them to realise their profits at the best moment; it also helps to resolve other problems in family-owned firms

There are various reasons why shareholders want to sell their shares. The clearest one is to obtain funds for other investments. There is also the convenience of diversifying risk and embarking on other activities in sectors with a different economic cycle.

The exit of some shareholders tends to coincide with a transformation of the company. This transformation often manifests itself in third generation family-run firms.

The stock market enables the company's owners to quickly sell their shares at an objective price

When the company becomes a "family firm" the need arises from time to tome to provide an exit route for a shareholder at an objective price. Something similar happens when a minority shareholder disagrees with the company's strategy for the future or loses interest in the firm. Of course, a family-owned company and a listed company are not exclusive concepts; the possibility of selling shares in the market does not mean losing control of the company. On the contrary, a large number of firms listed on the Stock Exchange  remain under the control of family groups, and in some cases the listing has helped to ensure the company's survival.

Family-owned and listed companies are not exclusive concepts. On the contrary, a large number of firms listed on the Stock Exchange remain under the control of family groups

In all these cases, the stock market offers a viable solution, contributing the necessary liquidity for shareholders interested in placing their shares, at an objective price set by the market on the basis of the company's situation and the economic environment. Selling shares to a wide collective of investors is the best way to prevent predominant situations which, in a trade with a single investor, can bring the price below an objective valuation.

 

 

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