Young entreprenuers get an innovative idea which also gets funded. They grow the business and at some stage the Company also goes public. In the Indian context, there may not be too many companies where promoters hold minor stakes, though Groups like Tatas have run their companies with minority stakes. If the promoter owns non-dominant stake in the company which he helped found, will he still let go of management control? Yahoo is an example in recent times. Microsoft's Yahoo bid(s) get rebuffed - reasons are given why the offer is low etc. But are they the true reasons for rejecting the offer or is it loss of identity/control over the company which Jerry helped found is the reason. What's the future of the company? Does joining hands with Google the better answer, rather than joining hands with Microsoft?
"Jerry, you’re a billionaire because people all over the world bought your stock, and trusted you to do right by them. That’s the compact you make when you take a company public: you get to be really rich, but in return, you have an obligation to do everything you can to ensure that shareholders get a healthy return on their investment. It doesn’t matter that you would like Yahoo to remain independent, or that you can’t stand Microsoft. Your feelings aren’t supposed to get in the way of your fiduciary duty," says JOE NOCERA in this open letter to Jerry Yang in New York Times.
I feel this is applicable for many Indian businesses too, where owners also double up as managers of businesses and refuse to let go management control (into competent / professional hands), both in their interest as also in the interest of all shareholders.
