Luxury Wars-LVMH vs. Hermes” case study

1. Hermès International was a family-owned business for many years. Why did it then list its shares on a public market? What risks and rewards come from a public listing?
It listed its shares on a public market in order to support the long term development of the company as a larger number of potential buyers will be able to invest and help the company grow. It also makes shares easier to trade by the shareholders.
There are several risks which come from public listing such as; the need for added disclosure for investors. Public companies are regulated by the Securities Exchange Act of 1934 in regard to periodic financial reporting, which may be difficult for newer public companies. They must also meet other rules and regulations that are monitored by the Securities and Exchange Commission (SEC).
Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth. The actions of the company's management also become increasingly scrutinized as investors constantly look for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings.

There are also many advantages for a company going public. The financial benefit in the form of raising capital is the most distinct advantage, this capital can be used by the company to fund research and development alongside capital expenditure. Subsequently this may lead to an increase in market share for the company. 2. Bernard Arnault and LVMH acquired a large position in Hermès shares without anyone knowing. How did they do it and how did they avoid the French regulations requiring disclosure of such positions? LVMH had acquired the position under the radar of the Hermes family, company management and analysts by using equity swap.