Long-term ownership brings solid benefits to society
Companies with long-term ownership perform better in a number of areas which deliver good benefits to society – and they are just as productive. This is the finding of a new report by Kraka Advisory, commissioned by the Lundbeck Foundation.
With more sustainable business practices, fund-owned companies, co-operatives and family businesses stand out in various positive ways compared to other companies. For example, fund-owned companies are more innovative in terms of patent applications, applying for 62% more patents than similar companies without long-term ownership. Employees in co-operatives tend to be more satisfied and more stable in their jobs than employees in companies without long-term ownership, with 13% more saying they are very satisfied with their jobs, and positions lasting on average 17% longer. And family businesses are characterised by high levels of diversity in management, with 64% more women on the board compared to businesses without long-term ownership.
The long-term investment perspective in fund-owned companies is particularly important for innovation-intensive companies, as innovation takes time and such companies have a stable source of finance without having to chase after funding while working concurrently on the research and development of new products or technology.
The form of ownership in Danish companies is therefore of great importance for both the economy and society, and an important point is that the positive side benefits are achieved while companies with long-term ownership are at the same time just as profitable as other companies.
As a business fund, we believe in the importance of long-term ownership and the Danish fund model
Peter Mogensen, Director of Kraka Advisory, sees clear benefits in companies taking a long-term and more balanced approach to their business:
‘In this way, the owners of this type of business can ensure that the company develops in such a way that it also generates returns and brings value to future generations. It is important that in relevant contexts we see long-term ownership as a strength that helps to pull our society in a good direction. So fund ownership, for example, is a relevant consideration and option when deciding which form of company to set up.’
Lene Skole, CEO of the Lundbeck Foundation, welcomes the analysis from Kraka Advisory and hopes that it can help to start a dialogue about the importance of long-term ownership and the role of foundations in Denmark:
‘As a business fund, we believe in the importance of long-term ownership and the Danish fund model. But we also wanted to know more about it, so in the autumn of 2021 we asked Kraka Advisory to investigate the importance of long-term ownership for Danish companies. That has taught us a lot. The analysis shows that fund ownership creates value and provides room for innovation and development, while also strengthening the social sustainability of companies, for instance, through a good working environment. We therefore hope that the analysis will help to initiate a debate that may eventually lead to more companies considering fund ownership, and thus having the opportunity to develop in Denmark with long-term ownership behind them.”
(In Danish)
The Lundbeck Foundation is a commercial foundation encompassing a comprehensive range of commercial and philanthropic activities – all united by its strong purpose; Bringing Discoveries to Lives. The Foundation is the long-term and engaged owner of several international healthcare companies – Lundbeck, Falck and ALK – and an active investor in business, science and people through its commercial investments in the financial markets; in biotech companies based on Danish research and through philanthropic grants to science talents and programmes in Danish universities. The Foundation’s philanthropic grants amount to more than DKK 500m annually primarily focusing on the brain – including the world’s largest personal prize for neuroscience, The Brain Prize.
