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Family-owned businesses show resilience through pandemic

Credit Suisse Research Institute (CSRI) publishes latest report on family-owned companies

The ‘Credit Suisse Family 1000: Post the Pandemic’ report shows continued outperformance of family owned businesses to non-family-owned peers in every region and sector as well as showing signs of greater resilience amidst the COVID-19 pandemic.

Using its proprietary “Family 1000” database of more than 1000 publicly listed family or founder-owned companies, Credit Suisse has found that since 2006, our overall universe has outperformed non-family-owned companies by an annual average of 370 basis points. This outperformance has been strongest in Europe and Asia at 470 basis points and more than 500 basis points per annum, respectively. 

The COVID-19 pandemic has had a significant impact on equity market returns and volatility this year. Family-owned companies tend to have above-average defensive characteristics that allow them to perform well, particularly during periods of market stress. Return data for the first six months of this year supports that view given an overall year-to-date outperformance of around 300 basis points relative to non-family-owned companies.

Key Findings on family-owned companies

  • Higher growth and profits – The analysis suggests that, since 2006, revenue growth generated by family-owned companies has been more than 200 basis points higher than that of non-family-owned companies for both smaller and larger companies. At the same time, the analysis also suggests that family-owned companies tend to be more profitable. For example, average cash flow returns (using the Credit Suisse HOLT® metric of Cash Flow Return On Investment or CFROI®) are around 200 basis points higher than those generated by non-family-owned companies. These superior returns are observed across all regions globally.
  • Perform better on ESG scores - Family-owned companies on average tend to have slightly better ESG score results than non-family-owned companies. This overall better performance, which has strengthened over the past four years, is mostly led by better environmental and social scores as family-owned companies appear to lag their non-family-owned peers in terms of governance. From a regional perspective, European family-owned companies have the highest ESG scores with family-owned companies in Asia ex-Japan scoring better than those located in the USA and their scores are rapidly converging with those generated by their European counterparts. In fact, Asian family-owned companies already score better in terms of governance than their peers in Europe or the USA.
  • Older family-owned companies have better ESG scores than younger firms and this performance is seen across all three environmental, social and governance areas. Perhaps the fact that older family-owned companies have more established business processes in place allows them to incorporate or focus on areas of their business that are not directly related to their production processes, but that are relevant in terms of maintaining overall business sustainability.
  • COVID-19 impact – In order to better understand the ESG characteristics of family-owned companies, a survey of more than 200 companies was conducted. The companies were asked how much of a concern COVID-19 is to them going forward. Despite the impact on revenue growth this year, it seems that the family-owned companies surveyed view COVID as slightly less of a concern to their firm’s future prospects than non-family-owned companies. Family-owned companies have also resorted less to furloughing their staff than non-family-owned companies (46% versus 55%). Among family-owned companies, support programs have been set up most often in Asia rather than in Europe or the USA. This might reflect a greater availability of government-sponsored support programs in these regions.
  • Social impact – the survey showed that, while family-owned companies have focused more on social policies since the outbreak of the COVID-19 pandemic, they seem to lag non-family-owned peers on several ESG-related factors, most noticeably human rights and modern slavery-related policies. Family-owned companies on average have less-diverse management boards, fewer of them have support groups for the lesbian, gay, bisexual and trans (LGBT) and black, Asian and minority ethnic (BAME) communities, or have made public statements concerning respect for human rights or the related United Nation principles.

Urs Rohner, Chairman of the Board of Directors of Credit Suisse Group and Chairman of the Credit Suisse Research Institute, commented: “We have tracked the performance of family-owned businesses compared to non-family-owned businesses for many years now and have seen a regular pattern of stable and superior through-cycle profitability and returns for all shareholders, minorities included. With the onset of the global pandemic and an increased global consideration towards environmental, social and governance (ESG) concerns, we’ve added further qualitative analysis to delve deeper into what makes family-owned businesses unique.”

Eugène Klerk, Head of Global ESG Research Product at Credit Suisse, commented: “Our latest Family 1000 report reaffirms many of the outperformance metrics family-owned businesses have shown in our previous studies compared to non-family-owned businesses. When talking to investors about family-owned companies, we often hear that they outperform because of a perceived longer-term investment focus compared to non-family-owned companies. Our analysis suggests that this is indeed the case. This year, with the exceptional circumstances of a global pandemic, we delved deeper in our analysis and found the traditionally more conservative financial model of family-owned companies built on lower leverage and strong cash flow generation has proved an asset. They have notably relied less on government employment support to furlough their workforce, implicitly reflecting their own social responsibilities.”

The ‘Credit Suisse Family 1000: Post the Pandemic’ report is available at:

About the Credit Suisse Research Institute
The Credit Suisse Research Institute is Credit Suisse's in-house think tank. The Institute was established in the aftermath of the 2008 financial crisis with the objective of studying long-term economic developments, which have – or promise to have – a global impact within and beyond the financial services. Further information about the Credit Suisse Research Institute can be found at www.credit-suisse.com/researchinstitute.