From entrepreneur to businesswoman

A person I know is on the road from being an entrepreneur to being a businesswoman. She founded a company, grew it and then it was time to decide whether to follow the logic of a start-up and seek absorption by a larger company, or to take a path that would keep it independent. She opted for the second alternative. In a highly developed innovation ecosystem, the first option by far predominates. It is as it should be, but it is a sign of maturity that there are some entrepreneurs who opt for the second option.

My acquaintance, who is very skilled, decisive and sensible, cares first and foremost about the success of the entrepreneurial initiative. She knows that she has to continue to grow, that competition will be tough and that it will come from all sides. But she also cares about something else: she would like the company's growth to be compatible with the maintenance and persistence in Catalonia of her central decision-making core. We have discussed the implications of this wish.

One possibility is to opt for very strict organic growth. In the spirit of traditional family businesses. Without external capital and with great care with credit. Making and reinvesting profits. I believe that this path does not promise much for the stated goal. On the one hand, it can have a very negative impact on the growth of the company. On the other hand, it is a fact that, from the patrimonial point of view, entails a lot of risk for the owner family. It is possible that the first generation, that of my acquaintance, will put up with it. The inclination to do so, statistically speaking, will already be lower in the second generation, will continue to fall in the third, and so on. There are exceptions, but the chances are that sooner or later the company will be sold, very often on the basis of the sale price alone. It will not be strange if the buyer is a company in the same sector that does not need central services in Catalonia or, even worse, whose main interest is not so much to expand its market but to eliminate a competitor. There may be intermediate situations. The company can be sold to a venture capital fund. This fund will perhaps modify but not dismantle the central services. So far, so good. But private equity funds do not have the will to stay. They will end up selling the company, and we are back to where we were.

There is a better way: the capital market. One possible formula is the entry into the shareholding of an investment fund. If this fund is passive and oriented to the long term, the location of the decision centre is not, in principle, in danger, as long as the company remains viable. If the investment fund wants to redirect its investment, it will sell its stake without affecting the normal development of the company. If it is an active fund oriented to the short or medium term, the situation is not so clear-cut. Everything will depend on the conditions under which the entry has taken place and the agreements established. Loss of control by the founding shareholders is possible but not inevitable.

However, the best formula is for the company's shares to be listed on the stock exchange. To do so, the company must be well prepared and the right time and financial platform must be found. In the Spanish case, the continuous market can only be considered if the company is already large. After years of uncertain effectiveness, the BME-Growth market (formerly MAB), more accessible to smaller companies, seems to be gaining strength. And, of course, there are also the non-Spanish markets. In the large companies segment, if I look at the Íbex-35 I find three Catalan companies that fit the model I have described: Almirall, Grifols and Fluidra. And if I look at the large companies in the BME-Growth, and leave aside the real estate sector (socimis), I also find: ASPY Global Services, Parlem, Griñó Ecologic, Holaluz, Lleidanet.

I believe that this is the path that, compatible with the good development of the company, maximises the probability that the decision centre remains where its historical origins are. But nothing is guaranteed. Gradual changes in the territorial configuration of a company's central services are constant. And there are also sudden changes that do not derive from any corporate incidence (such as a merger) but rather from strategic choices. There are notable examples in the US: Boeing moved them from Seattle to Chicago in 2001 (according to its official statement, "to be closer to the operating units, customers and the financial community") and General Electric did it towards Boston in 2016, for significantly different reasons (according to its official statement, "because in Boston there are 55 colleges and universities").