High net worth individuals (HNWIs) see family businesses as a good match for them according to the results from our recent KPMG Family Business Global Survey. Nearly half say that they have invested in at least one family business, often in a personal capacity. Encouragingly, the vast majority say their experience of doing so was positive.
Many HNWIs are attracted to family businesses. When given a choice between investing directly in family or non-family businesses, the highest proportion (39%) of HNWIs prefer to invest in family businesses, while only 25% prefer non-family businesses. A further 36% have no particular preference.
The reasons for investing in a family business are well aligned with the importance families place on the longevity of their company and the idea that they are managing a legacy for future family members, as these are the factors that appear to give HNWIs comfort and the potential for good, stable returns. As one Spanish entrepreneur notes: “I like family businesses that have maintained continuity over the years as they are likely to have developed a secret for business success and have an advantage in the market.”
Another, UK-based HNWI adds: “I am in favour of family businesses as they are creative and many have proved their worth by surviving previous economic storms to remain powerful forces in their sector.”
“I would always like and want to invest in a family-run business because they have more stability in the market. A family business that has been running for generations will always grow, and also increase investments from profits. A family business is not likely to fail as most of these businesses are established to increase the wealth of the family,” said a Canadian entrepreneur.
This attraction is reflected in the finding that nearly half (44%) of HNWIs have previously invested directly in a family business, with more than three-quarters of these having invested in one or two family businesses. Nearly a quarter (24%) are serial family business investors and have invested in three or more.