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Hermès Paris

Published 28 Apr 2014
Reference 5945
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Prizes & Awards

Highly Commended at 2013 EFMD Case Writing Competition, Family Business Category

Summary

This case is about options for ownership design in family businesses. The Hermès family takes the firm public in 1993 with the dual aim of enabling individual members to exit via selling shares on the market and generating funds to finance the company's growth. Fifteen years later, as LVMH prepares a hostile takeover bid for control of Hermès, the family fights to protect its ownership by creating a family trust to keep minority ownership interests in check.

Teaching objectives

1) To explain the prevalence of family firms in the luxury industry. 2) To apply the 'Family Business Map' to design family-assets-based business strategies and governance to avoid roadblocks. 3) Why family firms go public and in what way being a public firm is different from a private firm. 4) To understand that the way a family firm lists its shares can have long-term consequences for ownership and governance. 5) To show how family firms can be protected from hostile takeovers by creating a family trust. 6) To underline the legal limitations on the defensive strategies that family firms can deploy against hostile takeover bids, which vary from one country to another.

Keywords
  • Luxury Industry
  • Ownership Design
  • Hostile Takeover Attempt
  • Family Ownership
  • Family Assets
  • Family Roadblocks
  • Family Trusts
  • Q31314
  • Corporate Governance
  • Corporate Governance for Family Firms
  • WICFE
  • Fair process, communication, psychology, gender
  • Governance, parallel planning, strategy, boards