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Many investors see family-owned or -influenced businesses, i.e. companies where a family holds a significant stake, as very small and usually privately held. The reality, however, is very different.
Indeed, almost half of the largest French and German listed companies and a third of the largest US have a strong family influence. Family-influenced companies comprise widely known names across the globe such as LVMH in France, BMW in Germany and Walmart in the US.
Furthermore, many academic studies show that family-influenced companies tend to outperform those that are not family-influenced.
This raises the question of what makes these companies so special. There are 3 main factors that explain why they could be more successful:
Does this mean that all family-influenced companies could outperform the market? The answer is no. But key attributes such as a strong alignment between management and shareholders, long-term thinking as opposed to short-term earnings management, and a clear focus on the core business are key ingredients for a company to be successful.
The CIO weekly thoughts focus and reflect on key topics, which caught Lars Kalbreier's mind during the week. It is more a free expression of thoughts to trigger healthy debates amongst the readership and by no means intended to be a strategy review.