white papers
Why we believe in family businesses and entrepreneurs
Family businesses and entrepreneurs make up a sizable proportion of our economies. Our research shows that these types of companies are closely associated with a specific set of desirable traits that hold the potential for sustainable, long-term returns.
Family businesses and entrepreneurs are one of the most prominent forms of companies in the world. In most countries, they represent between 70 to 95% of all entities. In Europe, they account for 60% of employment in the private sector, and contribute more than any other forms to job creation. This sheer size has been recognized as crucially important by the European Commission to fight unemployment. In addition to their representative size in major economies, these businesses are more commonly associated with higher equity ratio than others and prioritising organic growth in a stable, long-term fashion.
Definitions of what constitutes a family business can vary. In order to bring consistency and effectively capture the opportunities presented in this space, we have established a set of parameters designed to bring into focus a tangible investment universe. To be considered for inclusion in this universe, the business in question must demonstrate that the founder(s) or heirs must be the largest shareholder, own at least 10% of the capital, and must be actively involved in the operations of the business. By these metrics, our investment universe captures nearly 30% of listed companies in Europe and is typically represented by small cap companies.
Our research into companies in Europe has demonstrated that family businesses and entrepreneurs commonly exhibit characteristics we place in high regard. Namely, that they show superior economic returns, a long term strategy focused on navigating powerful mega-trends and challenges, and shareholder commitment.
We believe there are four core features inherent to these businesses which we explore in our latest white paper.
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Family businesses and entrepreneurs make up a sizable proportion of our economies. Our research shows that these types of companies are closely associated with a specific set of desirable traits that hold the potential for sustainable, long-term returns.
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