Company Alpha: The Family Firm Getting Noticed

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Abstract

On January 12, 2015, Eng. Derik was looking out of his top floor office in the building where his factory was located. He had just finished a meeting with a managing director of a German company interested in acquiring all or part of the company, Alpha Adhesives Ltd.

Company performance had been very good since its inception, with a constant growth rate from year to year. However, in 2011 after the Egyptian revolution, the company’s sales growth had begun to slow due to many smaller competitors entering the market. Company products were also reaching the maturity stage of their life cycle, putting a strain on the family business.

In 2013, the company was approached by a German Company, Gamma, interested in having a hub in the Middle East. They had chosen Alpha as a potential strategic partner they could cooperate with. After a long meeting with Eng. Derik, they made an offer to acquire 60% of the company in an agreement to transfer technology, while keeping the same management team.

The choice was really hard for Eng. Derik and the rest of the family. From the family side, giving up part of the family business to an external investor would mean that the family culture and traditions might no longer survive. From the business side, this business had been struggling for the past few years and the sustainability of the current status appeared to be almost impossible.

Emotionally burdened, Eng. Derik felt very conflicted and called for a family meeting to discuss the options facing them. He was hoping to find a solution to this dilemma that would combine both the family and the business interest under one clear strategic plan that would embrace sustaining both the family characteristics and the business aspects.

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