Family-owned businesses ‘outperform’ peers in all sectors
Family-owned businesses outperform their peers across all regions and sectors, and deliver stronger revenue growth and higher profitability, according to new data published today.
A longer-term outlook, less of a reliance on external funding and investing more in research and development are all contributing factors to the success of family or founder-owned firms.
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The study also found that the voting structure of the firm was was unrelated to shareholder returns, and said that “investor concern in this area is misplaced”.
The majority of the companies in the database are based in emerging markets where firms are likely to be younger, and therefore family or founder ownership is more common.
Older businesses performed worse than companies in their first or second generation, the research found.
Credit Suisse head analyst Eugene Klerk said: "This year we find family-owned businesses are continuing to outperform their peers in every region, every sector, whatever their size.
"We believe this is down to the longer term outlook of family-owned businesses relying less on external funding and investing more in research and development.
"Our research on a global scale also suggests family-owned companies with special voting right structures perform relatively in line with those with ordinary shares, contrary to the fears expressed by many investors."
Regional chief investment officer at Credit Suisse, Michael O'Sullivan, added: “Family-owned businesses make up a significant share across many parts of the world but are a relatively untouched area in terms of research and analytics.
“They have better revenue and margin growth, and have less risky balance sheets which make them ideal targets for investors.”
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