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Dear Kingdom Builders,

I recently met with a Fortune 500 CEO who navigated his company through the various social issues of the first half of this decade. As a strong Christian, many of these policies conflicted directly with his personal beliefs.

Remarkably, he was able to faithfully and tactfully maintain policies that aligned with his faith values. But he was clearly in the minority.

The pressure corporate CEOs are facing internally and externally is immense … particularly in recent years.

By 2021, nearly 90% of C-suite executives said companies were shifting from serving shareholders toward serving a broader group of “stakeholders.” And almost 80% said it was already happening at their own company.

That’s a significant shift. With that many influences involved, it begs the question:

Who can still say “no”?

Companies generally don’t start with complicated governance structures. A founder owns the business and makes the decisions. Then they bring in investors.

When founders bring in new investors, they give up a piece of the company. We usually think about that in financial terms. “How much of the future upside am I giving away?” That’s share dilution.

But something else is often diluted at the same time: control.

Control dilution likely looks like you would imagine. Board seats, voting rights, vetoes, etc. Someone else is gaining influence over decisions the founder once made alone.

For Christians, this is especially pertinent. The principle of subsidiarity says that decision-making authority should remain as close as possible to those actually responsible for the decisions. When it comes to maintaining values, you can see why it matters.

So, who can still say “no”?

In private deals like startups, investment funds, or even real estate syndications, the stakeholders and lines of influence tend to be more accessible

Ideally we get into deals where our values align with the values of the people managing them. But as more interests get involved, the influence changes.

How can you assess whether the company will maintain its values?

There are always unknowns, but the goal is to discern intent and trends. It really boils down to three key questions:

While we can’t predict the future, this should at least offer a strong indicator of what to expect.

Of course, the cleanest way to avoid control dilution is to keep ownership as closely held as possible.

And that’s exactly what David Green and the Green family did with Hobby Lobby. And that decision opened the door for a Supreme Court win to maintain their values that few others could have ever attempted.

This week’s Kingdom Builders episode focuses on their remarkable story of stewardship, how they retained control, their $1.3m/day fight with the federal government, and the impact they created for other Christian business owners.

If you don’t know the story, it’s well worth 8 min and 38 seconds of your time.

No matter what direction we think a company is headed, the values you're buying are only as durable as the control behind them. So it may save you some trouble if you think to ask up front, who will still be able to say “no”?

Have a blessed week!

Matt

GuideStone is warning retirement-plan participants about a growing scam in which criminals impersonate tech support, banks, or government officials and convince victims to move money into supposedly “safe” accounts. The warning follows an attempted theft from a GuideStone member and is a good reminder to independently verify any unexpected request involving retirement or investment assets.

Pope Leo XIV appointed eight new members to the Vatican’s Council for the Economy, including Liechtenstein wealth-management executive Gisela Bergmann. The council oversees the Holy See’s financial and administrative structures, approves its annual budget, and reviews its consolidated financial statements.

A control premium is the additional amount an investor may be willing to pay above the value of a minority interest to acquire enough ownership of a company to influence or determine major business decisions.

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