In their joint study ‘Financing family business growth: bringing family businesses and investors together’ WomenCorporateDirectors (WCD) and KPMG explore the funding partnership between family businesses and HNWIs within the WCD community. The report reveals that despite challenges on both sides, family businesses and HNWIs have an appetite for investment and can prove to be highly compatible partners.
The majority of WCD family businesses have a significant amount of family member involvement - with 90% of business surveyed owned by family members with a majority stake. With both ownership and management firmly in family hands, the governance structure turn out to be less formal and strongly influenced by family. Despite this fact, families are quite amendable to offering equity to the right type of investor and to inviting independent members to their board.
Internal profits are not always enough to finance family businesses’ ambitious plans for growth and expansion. 82% of those afraid to lose independence support the idea that finding a suitable financing partner could be a challenging task for family businesses in their desire to balance financing needs with a reluctance to relinquish control.
WCD’s surveyed family businesses are clear on what drives their success and place importance on the family element, namely shared values, ethos and other intangible assets. 58% rate trust and 42% similar-to-family values as the most desired characteristics for external investors.
The report is based on the responses from over 40 family businesses and HNWIs from the WCD network worldwide. Further qualitative interviews with the selected members were held by Christine Blondel, an Adjunct Professor of Family Business at INSEAD and Senior Advisor to KPMG on Family Business Intelligence, and are presented in a ‘Qualitative comments on the survey’ section. The results are also compared with the findings of the KPMG Global Family Business Report, issued in September 2014.
WomenCorporateDirectors (WCD) is the only global membership organization and community of women corporate directors, comprised of more than 3,500 members serving on over 6,500 boards in 68 chapters around the world, with many more slated in the next two quarters. The aggregate market capitalization of public companies on whose boards WCD members serve is $8 trillion – if WCD were a country, its economy would be the world’s third largest, behind only the U.S. and China. In addition, WCD members serve on numerous boards of large private companies globally.