5 Myths and Truths About Family Businesses

Family businesses have long been the backbone of economies around the world. They create jobs, drive innovation, and build legacies that extend far beyond quarterly profit statements. But while family enterprises hold immense potential, they’re often surrounded by misconceptions that can cloud both public perception and internal decision-making.

The Global Family Business Report 2025, developed in collaboration with the STEP Project Global Consortium and KPMG Private Enterprise, sheds new light on what really drives success in family-run enterprises. Drawing on data from nearly 2,700 businesses across 80 countries, the study uncovers how governance, sustainability, values, and long-term strategy shape meaningful growth.

Let’s cut through some of the most common myths about family businesses—and reveal the truths that position them for lasting prosperity.

Truth: Growth is about more than profit—it’s about “good growth” that sustains purpose, people, and legacy.

While revenue and profitability remain important, family businesses often measure success through a wider lens. “Good growth” means pursuing expansion that is aligned with family values, minimizes conflict, and contributes to long-term sustainability.

According to the 2025 report, growth that ignores purpose can erode trust and damage both financial and social capital. On the other hand, businesses that embrace innovation, community engagement, and diversification not only thrive financially but also strengthen their family legacy.

In other words, how you grow is just as important as how much you grow.

Truth: Formal boards and clear governance boost performance and reduce conflict.

One stereotype is that family enterprises run on informal rules—coffee-table meetings, unspoken understandings, and decisions driven more by family hierarchy than business strategy. While this may be true for some, high-performing family businesses show a different picture.

The report found that 67% of top-performing family businesses had formal boards-significantly more than the global sample. These boards often included independent, non-family members (about one in four seats) and had strong gender diversity (nearly one-third of members were women).

Governance provides structure. It clarifies decision-making, reduces the potential for disputes, and ensures that strategic planning takes the long view. Rather than restricting flexibility, it creates accountability and stability that strengthen resilience across generations.

Truth: Sustainability fuels performance and strengthens reputation.

Some might believe sustainability is a side project—something family businesses do for optics, not outcomes. But the research proves otherwise.

Nearly 80% of family firms engaged in sustainable practices—such as investing in employees, building community ties, and adopting environmental initiatives—also reported high or medium performance. Moreover, 70% of these sustainable firms had formal boards, underscoring the link between good governance and responsible growth.

Sustainability is no longer just a buzzword. It’s central to resilience, reputation, and value creation. For family businesses seeking to preserve legacy, embedding sustainability ensures relevance for future generations.

Truth: Many family firms leverage M&A and external investment to grow strategically.

The traditional image of a family business is one that guards its independence and avoids outside involvement. Yet today, many are embracing new strategies to fuel expansion.

Moreover, private equity is becoming a viable growth partner. For the right match, it offers not just funding but also operational expertise and market insight. Of course, cultural fit and alignment with family values remain non-negotiable—but when done right, external capital can amplify both financial results and long-term vision.

Truth: Success lies in continuity, not just succession.

It’s easy to think that the ultimate marker of family business success is whether ownership passes from one generation to the next. While succession is important, the modern family business aims for something broader: continuity of purpose, values, and long-term growth.

The report highlighted that 46% of firms with strong transgenerational entrepreneurship, (a measure of entrepreneurial activity across generations—also delivered higher performance, nearly 43% more than the global sample.

This means that thriving family businesses aren’t just thinking about the “who” of succession, but also the “how”—ensuring that innovation, governance, and strategy evolve alongside each new generation.

The Global Family Business Report 2025 makes one message clear: the best-performing family businesses aren’t just chasing numbers. They are building organizations rooted in values, sustained by good governance, driven by purpose, and adaptable to change.

Key takeaways for family enterprises include:

• Align growth with values. Expansion that contradicts family identity or purpose can cause friction and instability.
• Invest in governance. Formal boards with diverse perspectives improve strategy, reduce risk, and ensure accountability.
• Embed sustainability. Long-term commitment to community, environment, and people is good for both society and performance.
• Be open to external capital. M&A and private equity can fuel growth if aligned with family goals.
• Think beyond succession. Continuity depends on innovation and long-term vision, not just passing the baton.

Family businesses are unique in that they balance financial goals with legacy, values, and purpose. By embracing these truths and dispelling outdated myths, they can secure sustainable prosperity for generations to come.

Renos A. Ioannides
Board Member
Head of Family Business
KPMG in Cyprus

Elena Pachita Yiakoumi
Senior Content Writer
Clients & Markets
ΚPMG in Cyprus