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April 2008 — Vol. 86, No. 3

Facts about family businesses

 

Connecticut has an estimated 70,000 to 90,000 family businesses, says Patricia Cale, director of the UConn Family Business Program. “The number is fluid because these businesses are in a constant state of flux. A nonfamily member might take over the leadership role, or a retiring owner might sell the business to a nonfamily member,” she says.

Other facts worth noting are:

  • Family businesses comprise 80% to 90% of all businesses in North America.

  • Family firms contribute 64% of the nation’s gross domestic product (GDP) and employ 62% of the U.S. workforce.

  • More than 30% of all family-owned businesses nationwide survive into the second generation; 12%, into the third generation; and 3%, into the fourth-generation and beyond.

  • In a study of S&P 500 firms (Anderson and Reeb, 2003):
    – Young family firms and old family firms (50-year-old threshold) outperform non-family firms.
    – ROA (return on assets) is greater in family businesses, which have a 6.65% greater return than nonfamily firms.

  • Families own their businesses for an average of 78 years.

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