Family businesses outperforming public companies

Credit Suisse Family Business Index has outperformed the market over the past five years by 8%

Contradicting the common belief that professionally managed companies do better than family businesses, a study by Swiss investment bank Credit Suisse and global advisory Ernst & Young has found that the family business model remains more robust in the face of slow economic activity and the euro zone crisis.

According to research report “Family businesses: Sustaining performance” released by the Credit Suisse Research Institute and Ernst & Young, 60% of family businesses reported revenue growth of at least 5% in last one year.

The findings highlights that by operating a different management style focused on long-term investment, family businesses are outperforming public companies, thus proving to be very successful.

The research is based on a survey of members of the Family Business Network International (FBN-I) from across 33 countries. 21% of the survey respondents are from emerging markets in Asia Pacific, Eastern Europe and Latin America, while 79% from developed markets mainly in Europe. It dissects the attributes of listed and non-listed, small and large and young and old family businesses, and considers the contemporary macro issues as well as the structural ones faced by family businesses, such as sustainability and governance and the human capital challenges of succession and talent management.

Michael O’Sullivan, Head of Portfolio Strategy and Thematic Research, Credit Suisse Private Banking: “The family business model – centred on a longer-term focus, cohesion and awareness of sustainability issues, and an emphasis on the importance of product quality – is not only proving to be a vital engine of economic activity, but also the antidote to some of the structural failings uncovered by the financial crisis.”

Richard Kersley, Head of Global Research Product, Credit Suisse Investment Banking: “We believe that now is an ideal time to cast the spotlight on family businesses, given their recent performance. As further evidence of this, the Credit Suisse Family Business Index has now outperformed the market over the past five years by 8%.”