Governance

What exactly does Ingvar Kamprad own?

Ingvar Kamprad recently complained when a Swiss magazine said that he is the wealthiest person in the country. The reason, said the IKEA founder – who is a Swiss citizen – was that Bilanz had wildly over-estimated how rich he is.

That is easy to believe, because rich lists have a tendency to inflate their subjects’ wealth – bigger numbers titillate readers – and also because IKEA’s ownership structure is notoriously labyrinthine.

On the face of it Kamprad’s complaints might seem trivial, though. Doesn’t he have better things to worry about? But there are good reasons that he might be unhappy, because when people get it wrong, it can be damaging.

“The people who write these lists equate ownership with any sort of brand connection,” says Sarah Cormack of law firm Withers. Obviously, journalists do this to maximise the wealth of the people on their lists. But this is misleading because their companies will rarely be held in the founder’s own name, but by trusts or foundations.

The point of setting up these holding structures can be tax effectiveness, succession planning, or asset protection and “any suggestion that those assets are still owned by them rather than in the ownership of the structure is deeply undermining of those objectives,” Cormack says.

Connecting their names directly with these businesses “makes them very nervous” because it can jeopardise those intentions. (Not to mention the businesses themselves.)

Kamprad’s complaints also raise some deeper points about ownership. Family firms often talk about culture – and IKEA has a strong one, which is often said to embody or express Kamprad’s own frugal, Swedish character. So there is a sense in which IKEA is forever “his”. His DNA is in it and it is, if you like, his baby.

Founders can be held in so much esteem by others that they are listened to, even when they no longer run the business or have sold part of it. It’s not unusual for founders to feel that the business will always be theirs, even when legally it isn’t any more.

Gary Laitner of Faegre Baker Daniels, a law firm, differentiates between “legal ownership” and a “cultural” kind of ownership. Often in such businesses, he says, “in a cultural sense, nobody quite knows where ownership and control lies.”

That needn’t only be about the culture of the firm, but the broader culture. Even within England, he says, the notion of ownership can vary from place to place. In London, where the financial markets dominate, it is natural to view a business as a thing to be built and sold. In the Midlands, however, where there is a strong manufacturing tradition “people take a longer-term view of investment and profitability”, says Laitner.

There, the attitude is more similar to the one found in the German Mittelstand, and the concept of “family ownership” – the idea that “I own it, but it is not mine to sell”, as Laitner puts it – is coming back.

This is partly because selling is no longer as profitable as it once was. Also, perhaps, the idea is maybe also filtering through from the many very successful British-Asian family businesses who often see themselves as stewards, not owners, of a business.

The concept of ownership is about more than whose name is on a piece of paper. It is about control, power, culture and the future of not only the business, but the holding structures around them and the family’s future wealth. Ingvar Kamprad is right to be sensitive about what people say is his.

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