Family-owned companies are more profitable and innovative, Credit Suisse says in survey of 1,000 wealthy clans worldwide

Family-owned business outperformed their non-family peers by 3 per cent since 2006, Credit Suisse said in its survey of 1,000 family-owned companies.

Among the 1,000 family-owned businesses, 517 are from the Asia-Pacific region with US$4.2 trillion of value. The Asian families, excluding the ones in Japan, ran their businesses with excess returns of 3.3 per cent per annum over the period, according to the survey released on Tuesday.

“Family-company returns on capital have consistently reflected a premium in each region over their non-family counterparts of between 1.5 per cent and 2 per cent, showing a sustained track record of superior value creation by family businesses”, said Nannette Hechler-Fayd’herbe, Chief Investment Officer for the EMEA region and Global Head Economics & Research.

Asia’s representation in the survey by Switzerland’s second-largest bank underscores the region’s significance to the wealth management business, especially the financial services for family office and ultra wealthy clients.

Early-generation companies perform better, reflecting their early entrepreneurial life cycles and stronger growth that accompany them, according to the survey. On the contrary, the later generations may be facing impediments to growth as issues related to succession become more prevalent.

In 2022, family-business performance reversed sharply around 7 per cent in 2022. Companies with a high cash-flow return on investment model, which is in line with the family-business model, performed better in 2022 amid a world of rising bond yields.