Merck, with little debt, plans for its future




The family that owns the Merck Group pharmaceutical and chemical company produces an annual, in-house magazine that updates the family — and non-family employees — on key developments, noted

a recent profile on the

Wall Street Journal

website (Europe section).

The Merck Group believes that this alignment of corporate and family values is one of the main reasons for its success. Of the 230-odd blood family members, 140 are shareholders and limited partners of the company, Family members are not paid a salary. Instead they receive annual dividends and everything they earn is channelled back into the private arm of the company.

The

Journal

report noted that about 85% of the family members live in Germany and half of those are still based in Darmstadt, where Frederic Jacob Merck acquired a pharmacy in 1668. Eleventh-generation member Jon Baumhauer is chairman of the family board.

Succession planning is a key consideration for the firm, and Merck holds international educational programmes, most recently in Rome, for about 30 family members between the ages of 15 and 21. The aim is to allow the next generation to bond and learn about the business they will one day inherit.

At a time when other large German businesses have been overleveraged, “Merck is relatively debtlight,” the article said. (Source:

Wall Street Journal,

Nov. 9, 2009.)

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