Family businesses make a huge contribution to prosperity in Germany with their rather special characteristics and their values that are geared towards standing the test of time. They form the backbone of the German economy as the dominant type of business entity and are important locally due to their strong regional ties.
A strong system of values, the close link between the owners and the family company, long-term outlook, thinking in generational terms, ties to the region, customer proximity - to what extent do all these special characteristics give family businesses a competitive advantage over non-family businesses?
This question is addressed in cooperation with KPMG in Germany in the “2022 Family Business Benchmark” study from the Institute for Midmarket Research at the University of Mannheim. For this purpose, 253,552 business entities were studied from the eleven metropolitan regions of Germany: Northwest; Hamburg; Hanover-Braunschweig-Göttingen-Wolfsburg; Berlin-Brandenburg; Rhine-Ruhr; Central Germany; Frankfurt/Rhine-Main; Rhine-Neckar; Nuremberg; Stuttgart; Munich.
Few family businesses are run by third-party managers alone
The study shows the family businesses with regard to their financial position, cash flow and financial performance as well as their management and governance structures.
Senior Manager, Markets
KPMG AG Wirtschaftsprüfungsgesellschaft
Among other things, this shows:
· Family-owned business strategy aims for longevity, independence and security: They hold higher proportions of cash than non-family businesses, have comparatively high equity ratios, and own a large portion of their fixed assets themselves. They are also keener to invest than non-family businesses.
· Family-owned businesses generate higher turnover and are more profitable than non-family-owned businesses on average, as measured by their capital.
· In 74 percent of the family businesses studied, the shares are concentrated in one shareholder or a family of shareholders. 78 percent of family businesses are run by at least one family shareholder.
· Family businesses are more often run by women (8.7 percent) than non-family businesses (7.7 percent). Non-family businesses, on the other hand, have a higher share of mixed management (approx. 28 percent versus 20 percent in family businesses).
· All metropolitan areas have a very high proportion of family-owned businesses (approximately 90 percent) that provide up to 80 percent of jobs.
Study provides insight into the economic structures of the eleven metropolitan regions
The study provides a detailed comparison of the different types of business entities across the eleven metropolitan regions with the aim of revealing potential regional differences and similarities. Comparing family and non-family businesses located there provides important insight into regional economic structures.
In addition, the benchmark allows entrepreneurs to gauge how well their company compares to other business entities in their metropolitan region or to those in other German metropolitan regions.
The 2022 benchmark thus provides food for thought and answers to relevant questions about family businesses and mid-market companies in Germany. It also provides insights for policymakers.
You can download the study here.