Insights
Family Businesses Outperform Publicly Traded Companies
By Keith G. Baldwin and Drew Steen
10.12.15

Traits of Family Business Operations
The researchers identified seven primary ways in which family business owners are differentiated from their peers:- Frugality
- Better Scrutiny of Capital Expenditures
- An Aversion to Debt
- Fewer (and Smaller) Acquisitions
- Diversification
- International Presence
- Retention of Talent
Company Culture and Talent Retention
Others traits on that list are more difficult to appreciate, such as the ability of a family business to retain talent. A widely discussed challenge of many family businesses is the tension between finding the right person for the job and keeping family members involved in the business. To fill roles, is it better to find a more qualified outsider or is it better to use a less qualified family member? By implication from the HBS study, the ability to retain outside talent is attributable to the culture family businesses are able to maintain. Many family business owners find that, with the sense of family follows the possibility of more security and connection among workers – even those not in the bloodline. The ability to capitalize on this culture and weave it into the business is a distinct advantage of family-owned businesses. Obviously, these are all generalizations across many businesses in many different stages and industries. Not every family business will succeed in these areas to outshine its competitors. But it is interesting to take note of the aggregate comparison and to focus on the underlying advantages that family businesses have that can allow them to execute on these seven points. Keith Baldwinis a business transactions and securities lawyer with a thirty-eight year history of serving clients’ legal needs. Keith focuses his practice on business relationships, including mergers and acquisitions, agreements among owner-entrepreneurs, and best practices for corporate governance. Keith can be reached via email at keithbaldwin@dwt.com or directly at 425.646.6133. Drew Steenis a business transactions attorney at Davis Wright Tremaine, LLP. He represents both buy-side and sell-side clients in mergers and acquisitions, venture capital investments, joint ventures, equity co-investments and restructurings. He also serves as regular corporate counsel for several closely-held and family-owned companies. Drew can be reached via email at andrewsteen@dwt.com or directly at 206.757.8081Related Insights
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