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Cadbury takeover raises questions about ownership and purpose

There’s been some discussion around about the meaning of ownership in the UK when it comes to our companies.

Mallen Baker’s recent column on EthicalCorp.com asked “Is it time to change the ownership of our best companies?

In the piece, he writes:

“…increasingly I’m coming to the view that it is easier to have a company founded on values and integrity when it is privately owned than when it is listed. Why?

Because the owner can make mistakes and learn from them without being fired the first time something goes wrong. Because the owner can show real leadership – in the way that Branson did, for instance, with pledging the profits from his transport companies into climate change programmes.”

Following that, Mallen and I taped a podcast on the topic which you can find at this link.

And this morning Martin Wolf of the FT is asking some similar questions, before concluding that in the UK, sale at the highest price is just the way it is. This is not true elsewhere, he points out, in other large countries.

Wolf, the FT’s chief economics commentator, says that: “Companies exist to provide valuable goods and services to their customers”. I could not agree more.

It may well be that our ‘traditional’ (actually last 30-40 years only) model of profit maximisation for shareholder as purpose, will be called into question more and more.

The silver lining of the meltdown, you might say.

And I can’t see the Asian tiger economies eagerly signing up 100% for the rough and tumble, more cut-throat capitalism of the UK or USA.

Is it time to ‘bring on’ the hybrid model? Where the stock market and dispersed shareholders/outside investors have their say and invest their capital, but have to share control with others, real owners, who have a longer term vision.

There are problems with this model of course. The potential for lack of clarity, in-fighting, and dictatorial owner-operator CEOs.

But clearly the ‘three-four years ahead as long term’ model of shareholder capitalism and private equity is not perfect either.

Might the answer lie somewhere in the messy middle? For some companies at least the answer must be yes.

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