Skin-in-the-game

Why we prefer ‘First-Generation Owner-Operator with Skin-in-the-game’?

Posted by | Investing Framework | One Comment

We often say while talking about our investment philosophy that we prefer companies which are led by ‘First generation, owner-operator with skin-in-the-game’. Why do we have such a preference? A company is called to be owner-operated when it is led by the promoter(s) who own the majority stake in the company. It is said to be first generation owner-operated if it is led by the founding promoter(s). Think Relaxo Footwear or Wonderla Holidays. Over time the leadership could be passed on to the next generation though it will continue to be termed as owner-operated. Think Garware-Wall Ropes which is currently led by 3rd generation or Amrutanjan Healthcare led by 4th generation. The baton could also be passed on to a professional management team; qualified and experienced managers who would now …

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