Published by:
Harvard Business Publishing
Length: 5 pages
Abstract
In 1961, Richard Salomon, the sole owner of Charles of the Ritz, decided to issue public shares in his company. The perceived advantages were the possibility of diversification, establishment of value for estate and inheritance taxes, availability of equity, personal satisfaction, liquidity, and the ability to retain control of the business. When the shares were offered, disadvantages became apparent. Closely knit executives began jockeying for positions and personal relations became strained. Short-term results became a priority over long-range planning. Stockholders were primarily interested in share value, expressing opposition to ventures that jeopardized short-term profit for the sake of long-term growth.
About
Abstract
In 1961, Richard Salomon, the sole owner of Charles of the Ritz, decided to issue public shares in his company. The perceived advantages were the possibility of diversification, establishment of value for estate and inheritance taxes, availability of equity, personal satisfaction, liquidity, and the ability to retain control of the business. When the shares were offered, disadvantages became apparent. Closely knit executives began jockeying for positions and personal relations became strained. Short-term results became a priority over long-range planning. Stockholders were primarily interested in share value, expressing opposition to ventures that jeopardized short-term profit for the sake of long-term growth.