About two-thirds of Portuguese family businesses are managed by the second and third generations of the family, and 20% of them are managed by the fourth generation. This conclusion was drawn from a study conducted by KPMG on about 2,700 family businesses around the world and about a hundred Portuguese companies. According to a report fromA prefix meaning environmentHalf of family businesses say they are managed by several generations.
With an average age of 67 years, compared to the average age of 42 years for companies globally, only 6% of Portuguese family businesses have a first-generation CEO, according to a study titled “Strengthening Legacy – The Growth Path of Family Businesses.” Conducted by KPMG, it included 2,683 companies from 80 countries.
The KPMG study also concluded that there have been significant changes in the governance of these companies. At 78% of the enterprises' families in ports have a share of the direction for the enterprise, with a moyenne of 3.5 people in this direction, and in the World, with a total percentage of 61%, with a moyenne of 5 ,3 people.
Regarding capital ownership, the Portuguese average is in line with international responses, with the study indicating that 88% of family businesses have family-owned shares, just as in global family businesses. The study reveals that on average, 5.57 family members own shares in the company.
the legacy
The study assessed the importance of family heritage – biological or generational (surname and lineage), physical (financial assets, inheritance, etc.), social (relations with the community), identity (company history and rituals), and entrepreneurship (resiliency). In the face of new challenges, etc.) – in corporate activities, concluding that companies in which this heritage is stronger tend to offer stronger and more sustainable activities.
45% of family businesses around the world that reported having a strong business legacy also had good business performance and 53% had high levels of sustainability. The study concluded that “there is a strong link between the depth of family business heritage, their financial performance, and the strength of their sustainability practices.”
The report also highlights the importance of cross-generational entrepreneurship as a key factor in the sustainable performance of family businesses, as legacy alone is not sufficient to ensure long-term progress. According to the study, legacy is amplified through cross-generational entrepreneurship that requires ancestors to communicate openly and build on the legacy of their companies, bridging what can sometimes seem like a generational gap.
“The values that make up the concept of 'heritage' link generations, ensure the continuity of the company's success and shape the long-term vision of the family business, guiding some of its choices,” explains Luis Magalhães.
For the Tax Director at KPMG Portugal, “In the current context, the topic represents a challenge for family business managers who consider it necessary to approach the paradox in the sense of adopting historical and traditional values with current strategies to enhance the company’s success process. And to build a dynamic and lasting legacy while placing value for future generations in consideration.”
“Based on the experience we have, working daily with our clients, we are confident that the heritage of family businesses contributes to cross-generational entrepreneurship, financial performance and sustainability practices,” Luis Magalhães adds.
Of the 100 Portuguese companies that responded to the study, 61% are large companies with more than 250 employees, 28% are medium-sized companies and 11% are small companies, KPMG says. In terms of sectors of activity, 73% are service companies, 22% are in the agricultural sector, 3% are in the industrial sector, and 2% are in the construction sector.
