Reinventing the Family Firm - Chapter 1

DEFINING THE FAMILY BUSINESS PORTFOLIO FIRM

Exhibit 1.2: Earliest known drawing of the three-cycle model by Tagiuri in 1978. Source: Tagiuri & Davis, 1978; reprinted in Davis & Lombard, 2019 p.54

♦ A decision not to borrow against the assets in the portfolio, again to limit SUI’s risk exposure. ♦ A desire to try to build as much as possible on the author’s own competences and networks, as previously discussed, as well as on the core skills of other members of the family (entrepreneurship, finance, etc.). ♦ A desire to immerse the author as well as his son and son-in-law in the latest thinking in investment theory, and to attempt to implement this in praxis. ♦ A decision to use scenario planning as a central tool when developing SUI’s investment strategy. ♦ A desire to continuously reassess investment processes and investor psychology to try to continuously improve our capabilities as investors; to learn more about this new craft or art. ♦ A drive to make use of the latest available technology when possible. A key objective here would be to try to take advantage of scalable opportunities. ♦ A preference for backing managers in the various business entities of the portfolio who showed strong commercial capabilities. Our philosophy has been to emphasize a desire for continuity and stability, and not to create disruption when not strictly necessary. Further, we felt that to become too heavily involved in the management of operating businesses might be seen as undesirable and could easily “burn up” too much of our time. Consequently, it was preferable to invest in well-managed funds rather than investing directly in new ventures. There are, of course, exceptions to this rule. Investing in search funds is seen as a particularly attractive way to save time. Time is the scarcest resource for the author and other family members when it comes to managing SUI.

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