Media Release Press Release
Early generation entrepreneurs drive the outperformance of family businesses
At its annual Asian Investment Conference, Credit Suisse published the latest ‘The Family 1000: Family values and value creation’ report to find family-owned businesses generated an annual sector adjusted excess return of 300 basis points compared to non-family owned companies since 2006, consistent across all regions. Despite more conservative spending on research & development, evidence also shows family-owned companies can transform an innovative idea into a profitable proposition more effectively than non-family-owned companies.
Credit Suisse used its proprietary “Family 1000” dataset, a universe of 1,000 major family-owned businesses stretching across the Americas, Europe and Asia Pacific, the latter being home to more than half of them.
They found performance to be stronger in the earlier-generation companies, reflective of the earlier stage of their entrepreneurial lifecycle and the stronger growth that accompanies it.
In 2022, “quality” as a stock market style or factor suffered in a world of rising bond yields and saw family-business performance reverse sharply by around 700 basis points as its high-return model is a “quality” model. However, the authors maintain the setback in 2022 has only unwound the exceptional outperformance driven largely by major technology companies in 2021 and restores relative performance back to longer-term trend levels. There appears to be a resumption of the longer-term uptrend in 2023 so far.
Innovation input and output
A special focus in this year’s report is the topic of innovation and family businesses. An analysis of the Family 1000 universe finds family-owned companies spend less on research and development (R&D) than their non-family counterparts. Despite the more conservative R&D spending or “innovative input” by family-owned companies, family-owned companies can generate a higher “innovative output” thanks to higher company-specific human capital generated from longer employee tenures, stronger social capital and a more efficient operating model.
As part of the report’s analysis, interviews were conducted with three CEOs of leading owner/operator companies. Simon Michel, CEO of Ypsomed, George Weston, CEO of Associated British Foods, and Tony Smurfit, CEO of Smurfit Kappa. We delve into the drivers, and specifically cultural, that shape decision-making at companies where a strong sense of the family heritage is a defining feature. This is accompanied by a discussion with leading academic Professor Thomas Zellweger of the University of St Gallen.
The report also explores the private space of founder businesses, listing the top 100 unicorns - private companies with an implicit valuation of USD 1 billion or more - globally and their role on the corporate landscape. The number of unicorns has risen five-fold since 2017 despite a more challenging recent funding environment. Themes of sustainability and decarbonization are expected to be powerful influences on new emerging businesses looking forward.
Nannette Hechler-Fayd’herbe, Chief Investment Officer for the EMEA region and Global Head Economics & Research, commented: “This latest study from the Research Institute explores the business model and investment performance of listed family and founder-owned businesses, and is the latest in a series of studies we have published on the theme. Family businesses represent important parts of listed equity universes in a number of markets and understanding them well is gaining deeper insight into equity investment opportunities. We find that family-company returns on capital have consistently reflected premium in each region over their non-family counterparts of between 1.5% and 2.0%, showing a sustained track record of superior value creation by family businesses.”
Richard Kersley, Managing Director, EMEA Securities Research, and Head of Global Product Management at Credit Suisse, commented: “This year’s study continues to show the long-term outperformance of family-owned companies compared to non-family-owned companies. On top of this, we also see evidence that family-owned
businesses generate a higher conversion rate of innovation inputs into innovation outcomes, despite more conservative spending on research and development. Looking ahead, we see decarbonization as a common thread across the unicorn landscape that will only grow in importance going forward.”
The ‘Credit Suisse Family 1000: Post the Pandemic’ report is available at:
Credit Suisse Research Institute – Credit Suisse (credit-suisse.com)