McKinsey & Company : The secrets of outperforming family-owned businesses: How they create value

[John Hjorth]

This is a report by the consultancy company McKinsey & Company, as a collaborative effort among five authors, representing the views of McKinsey’s Private Equity & Principal Investor’s Practice and its Family-Owned Business Special Initiative. So it's actually intended, directed and adressed at the companys clients in those two departments.

 

I think there for us as DIY investors and stock pickers as members of CoBF there is a lot of useful stuff touched in this piece, that I think many of us may find interesting and worth the readers time to study.

 

Based on the report It's possible - as a DIY investor to deduct which criteria to assess and dive into when looking at such family controlled groups / companies, that appear from a rear viewing perspective appear to be long term successful.

 

I think the sample analysed and the underlying dataset may be of interest, but likely access to that is based on McKinsey client relation.

 

I really can't define or for my self explain how it is for my personal part, I can just conclude, that I after now more than a decade in investing have ended up buying a lot of such family controlled and well diversified stuff, and as years have passed, involved as long-only, long-term buy-and-hold, I have seen those positions have been pleasant experiences in most cases, with satisfactory returns, and very rare disapointments or negative surprises along the way, in short : how I like it most.

 

In many my cases, such stuff has been conglomerates, and thereby by their nature quite complicated, which I like, so there is always something interesting to study further, as the basic pro-business person I am, deep down in my roots.

 

So I would like to share the report here and discuss it with those interested, who may want to discuss it.

 

Link to report, and attached.

Mc Kinsey Co. - The-secrets-of-outperforming-family-owned-businesses-how-they-create-value-and-how-you-can-become-one - 20240829.pdf

[Spooky]

Thanks for sharing. I'm curious.

[73 Reds]

1 hour ago, John Hjorth said:

This is a report by the consultancy company McKinsey & Company, as a collaborative effort among five authors, representing the views of McKinsey’s Private Equity & Principal Investor’s Practice and its Family-Owned Business Special Initiative. So it's actually intended, directed and adressed at the companys clients in those two departments.

 

I think there for us as DIY investors and stock pickers as members of CoBF there is a lot of useful stuff touched in this piece, that I think many of us may find interesting and worth the readers time to study.

 

Based on the report It's possible - as a DIY investor to deduct which criteria to assess and dive into when looking at such family controlled groups / companies, that appear from a rear viewing perspective appear to be long term successful.

 

I think the sample analysed and the underlying dataset may be of interest, but likely access to that is based on McKinsey client relation.

 

I really can't define or for my self explain how it is for my personal part, I can just conclude, that I after now more than a decade in investing have ended up buying a lot of such family controlled and well diversified stuff, and as years have passed, involved as long-only, long-term buy-and-hold, I have seen those positions have been pleasant experiences in most cases, with satisfactory returns, and very rare disapointments or negative surprises along the way, in short : how I like it most.

 

In many my cases, such stuff has been conglomerates, and thereby by their nature quite complicated, which I like, so there is always something interesting to study further, as the basic pro-business person I am, deep down in my roots.

 

So I would like to share the report here and discuss it with those interested, who may want to discuss it.

 

Link to report, and attached.

Mc Kinsey Co. - The-secrets-of-outperforming-family-owned-businesses-how-they-create-value-and-how-you-can-become-one - 20240829.pdf 1.28 MB · 14 downloads

Great article!  For me, poignant factors that are transferable to investment in non FOB public companies are (1) superior capital allocation; (2) innovation; and (3) a long term investment approach by management.   

[SharperDingaan]

Interesting reading .... but a couple of caveats.

This is just the <5% of successes in both business, and succession; most of that other 95% will have had very different experiences. It is also a very different thing when you're a private vs a public company; as nobody regrets getting out of public reporting and its short-term mindset. Then keep in mind the colourful 5-10% that are very good at what they do; but habitually just happen to be on the wrong side of the law ... lot of generational businesses in there!

 

Personalities also have a lot to do with it.

 

SD

 

 

Edited August 29 by SharperDingaan

[Hektor]

Thanks @John Hjorth

[Hektor]

22 hours ago, SharperDingaan said:

most of that other 95% will have had very different experiences

Think PARA