The first quarter of a century delivers healthy family businesses: all that remains is to face the next three quarters

Studies and research confirming the superiority of family businesses are increasingly frequent and robust, and offer interesting insights and ideas for family businesses. In the past year, for example, familyandtrends commented on a study by UBS demonstrating superior performance over the past fifteen years and a other by Mc Kinsey that delves into certain areas that explain this superiority. The first and most authoritative is the observatory AUB which for years has been helping to define and stimulate Italian family capitalism. The observatory is one of the many things that Prof. Guido Corbetta leaves us as a legacy and lesson.
This week, more than 150 entrepreneurs and members of entrepreneurial families gathered at Palazzo Mezzanotte to nominate 30 Business Ambassadors: families and entrepreneurs who have distinguished themselves for the way they have adapted to the evolutions of the first 25 years of this century.
As the first quarter of this century has passed, Italian family capitalism seems to be in better shape than ever. The quantitative data of the Ambassadors' report confirm what other studies have said: companies with higher profitability, growing turnover, great source of employment. Some more in-depth data from more than one hundred interviews offer space for a few additional considerations.
The first: the more than 3,500 Italian family businesses with more than 50 million in turnover are owned by 21,908 shareholders, 53% men, 27.9% women, 19.1% companies. In family capitalism taking care of the business is one of the key activities: in Italy there are almost twenty-two thousand shareholders called to this challenge. The shareholders are resident in 68 different countries, but those who want to cry scandal over the archetype of the daddy's son residing in a tax haven waiting for dividends should think again: 93% of shareholders in Italian family businesses reside permanently, i.e. pay taxes, in our country. A 7% of foreign shareholders in a globalised world with families spreading out geographically is a more than acceptable number.
The second: 64.77% of shareholders have a role on the board of directors. Of course, boards of directors must be increasingly real places for strategic discussion and must see the presence of outsiders who bring ideas and constructive criticism, but this cannot obviate the need for trained and involved family members who put their own, often significant, share of their capital at risk on the decisions being discussed: more than fourteen thousand family members in our country help guide the companies they own.
The third: the 3,542 companies have 26,707 shareholdings, 48% of which are based abroad. The data says that in Italian family capitalism it is not the shareholders who go abroad to enjoy it, but it is the companies that go abroad to compete, apparently with some success. 23% of foreign subsidiaries are in the USA, France, Spain, China, Germany, the UK, Brazil.
The fourth: digitalisation, globalisation, energy transition and geopolitics are the four trends that have impacted family businesses the most in this first quarter of the century. The macro trends have mainly increased the level of competition and facilitated the entry of new players into the market. Twenty per cent of the companies analysed saw an increase in the availability of competing products as a result of digitisation and technological innovations, leading to a fall in prices and an increase in quantities produced. 26% reported an increase in costs, with a negative impact on company margins.
The fifth: 60.91% focus their assets on their current core business, 23.64% diversify into adjacent sectors, 11.82% integrate downstream or upstream in the value chain (the remaining 3.64% gave other answers). This figure confirms an industrial system that insists on what it does well, trying to do it better by adapting to the evolutions of this quarter century. One might think that this approach would sclerotise companies in declining sectors, but the economic results do not support this hypothesis.
The sixth: more than 70% of families have a family council or a place to discuss family matters outside the company, and more than 50% have rules for careers and remuneration. The first quarter of this century delivers families more aware of the importance of governance. The data identifies two challenges: the very low presence of education programmes for younger people underlines the need to create initiatives to prepare a new generation of 'capitalists' who will have responsibility for ownership and wealth. The low presence of processes and committees that allow the family to discuss strategies, diversification and wealth investment initiatives risks making entrepreneurial families unprepared for the physiological increase in the number of family members and the need to manage multiple spheres of ownership, e.g. business, wealth, philanthropic initiatives.
The first quarter century delivers healthy family businesses: the next three quarters await us.

* Professor of Family Business Strategy - University of Turin - bernardo.bertoldi@unito.it