Brazilian family businesses need to meet more HNWIs

Brazilian family businesses need to meet more HNWIs

The KPMG Family Business 2014 Global Survey found that High Net Worth Individuals (HNWIs) in Brazil were not viewing family businesses as potential investments.

Sebastian Soares

Audit Partner, Head of Family Business

KPMG in Brazil

Stickee notes

Interestingly though, this was not because of bad experiences, but more out a lack of family businesses being promoted as a viable investment option. Out of the five surveyed, only one had previously invested directly into a family-owned firm – and that particular firm was “well known” to the investor. Of the other four investors, two indicated some interest in investing in a family business and one more showed a high level of interest in the investment option.

HNWIs showed a solid foundation in family business

While they may not target family businesses for investment, the survey did find that three of the five companies had either successfully built a family business or belonged to an established family business.

This would indicate that the knowledge and understanding of family business values and preferences is there, with perhaps further education and promotion required to introduce this as an investment option for HNWIs. It also means that the HNWIs may not have been looking at family businesses as investment options in the past due to knowing that family businesses had liked to keep ownership and management in the family in the past – but with the current economic climate, family businesses are starting to welcome the capital, as well as the expertise of someone who understands a family business.

60 percent of Brazilian family businesses open to investment

Much the same as how HNWIs haven’t had family businesses in mind, the family businesses themselves in Brazil have also not thought to turn to HNWIs in the past. Only one out of the five family businesses surveyed in the KPMG Family Business 2014 Global Survey had obtained direct HNWI investment previously. In spite of this, the family business concerned was generally positive about the investment, which was raised from another family business.

"We had to raise funds for getting this task completed and we decided to approach other family businesses as we believe in supporting each other in different activities,” said the executive director of a successful family winery in Sao Paulo."

For the family businesses, it’s all about keeping that connection in all ties – even an investor must understand how the business operates differently to one that is not family run.

Even if there are some challenges and difficulties, family business and HNWIs in Brazil could become excellent business partners. It’s necessary to identify the needs of both parties and for family businesses to recognize the importance of external influences, aiming to establish new strategies and expand into new markets.

For this purpose, encouraging closer connections and communication between them is essential for businesses to thrive.

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