Inside the Strategy Room 214. The secrets to outperforming in family-owned businesses
Aug 16, 2024
Eduardo Asaf, Acha Leke, and Francesco Malatesta from McKinsey tackle the secrets behind family-owned businesses. They reveal how these companies often outperform their non-family counterparts and contribute significantly to GDP and employment. The trio discusses key strategies for success, such as capital allocation and purpose-driven governance. They highlight the unique characteristics of the top-performing family businesses, focusing on long-term planning and talent management, which can lead to substantial value creation over the next decade.
AI Snips
Chapters
Transcript
Episode notes
FOB Importance
- Family-owned businesses (FOBs) represent 70% of global GDP and 60% of employment.
- They are prevalent in both developed and emerging markets, impacting job creation and listed companies.
Value Creation Metric
- The research analyzed value creation using economic profit (value spread), comparing return on investment with alternative capital uses.
- This metric correlates with total shareholder return, providing insights into both public and private companies.
Outperformance Factors
- When accounting for invested capital, family-owned businesses outperform non-FOBs due to higher economic spread.
- Mid-sized FOBs are efficient investors, while larger FOBs are better operators with higher margins.