For more than a decade, the Family Business Community has been advocating for a system that strengthens the equity base of EU companies. Now more than ever, due in part to the extreme economic shock of the pandemic, Equity finance is key to strong andsustainable business growth. For most companies it is the most important form of finance. It comes in two main forms, paid-in capital and retained earnings.
For external stakeholders, a sound equity base in a company is an indication of a longterm commitment to the company by its owners. For financial institutions, a strong equity to assets ratio makes lending reasonably unproblematic even under Basel III. Without equity, access to debt is a challenge. A weak equity position raises concerns among external stakeholders, not least among banks.
Without equity, there is no other finance.