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Family Business Facts

Family Business Facts

Family businesses comprise 80 to 90 percent of all business enterprises in North America (Family Business Review, Summer 1996)
Only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth (Boston Globe, May 4, 2003)
Family owned businesses account for 60% of total U.S. employment, 78% of all new jobs, and 65% of wages paid (Financial Planning, Nov 1999)
Among the companies listed on the Standard & Poor's 500 Index, 34 percent are family businesses. (Ronald C Anderson and David M. Reeb, Founding-Family Ownership and Firm Performance: Evidence from the S&P 500)
Nearly 40% of family businesses in America will be passing the reigns to the next generation over the next 5 years (BusinessWeek, August 11, 2003)
By 2050, virtually all closely held and family owned businesses will lose their primary owner to death or retirement. Approximately $10.4 trillion of net worth will be transferred by the year 2040, with $4.8 trillion in the next 20 years (Robert Avery, Cornell University, "The Ten Trillion Dollar Question: A Philanthropic Gameplan")
Of CEOs due to retire within 5 years, 55% have not yet chosen their replacement (Arthur Anderson/Mass Mutual, 2003)
The number of family businesses run by women have grown 37% in the past five years with an average annual revenue was $26.9 million last year (Boston Business Journal, September 4, 2003)
Families’ preference for within family CEOs are associated with large declines in operating performance and valuation when family CEOs did not attend selective undergraduate institutions, but such correlation does not exists for unrelated promotions. Perez-Gonzalez (2003)
Family circumstances critically influence the choice of business strategy. There is significant potential for conflict between business logic and parents’ fairness considerations when assessing ownership inheritances or expansion strategies. Ward(1987), Gersick et al. (1997)