In praise of family owned businesses

Here’s some interesting news - according to a new report out by Credit Suisse, when it comes to making money, it’s the family-owned businesses that seem to be doing it best. The report, surveying the principal members of 900 family-owned firms found that these firms made more money, generated more cash and generally performed better in the financial markets than their non-family-owned counterparts. According to Eugene Klerk, head analyst of thematic investments at Credit Suisse, he says: “Over time, family-owned companies very structurally outperform in every region, every sector, and for small and larger companies.” So, what is considered a family-owned business?  That’s any company where a founder or their descendants owns 20 percent of the company’s equity. Many of us automatically think that family owned firms are mostly small businesses — and they are. But there are many larger, more well-known companies that also fall under this definition too. Regardless of size, why are family-owned firms so much more successful? It seems that most of them, according to Credit Suisse analysts, are in it for the long term and aren’t afraid to forego quarterly earnings targets to fund research and development for the future. You certainly can’t argue with the results.