What do IKEA, Lego, Lactalis and Almimet have in common? They are all family businesses, created over 75 years ago. While the average lifespan of a company in France is less than 20 years, family businesses are often characterized by much greater longevity. A difference that can be explained by different factors.
Characteristics of family businesses
A family business is a form of company in which the management and the majority of the capital are held within the same family. It is the members of this family who work together to manage the activity of the family business and who make important decisions. Another important point is the transmission of the business from one generation to the next within the family.
It should be noted that in France, the family business is not legally defined. They can therefore be small companies or large international groups. According to the European Commission, family businesses represent more than 60% of European businesses and 40 to 50% of jobs.
Management “as a good father”
One of the essential characteristics of family capitalism is its ability to operate in the long term with a desire for sustainability and intergenerational transmission. Where other businesses can be guided by a short-term logic and profitability at all costs, family businesses can more easily make strategic choices, which will only bear fruit after several years.
They have a preference for self-financing over debt and often maintain privileged relationships with bankers, which is a facilitating factor for financing. They distribute on average fewer dividends and prefer to invest excess cash flow in long-term projects. Beyond the financial profitability of the business, it is often a collective and emotional project which is carried out and shared by the members of the family, ready to invest personally in the event of difficulties.
Independence, a core value
The sustainability of capital and decision-making independence remains a subject as crucial as it is delicate in many of these structures. According to METI (Movement of Intermediate Enterprises), when family businesses go public, it is not uncommon to see them buy back their shares and withdraw from the market once the projects are financed.
Some managers also prefer to develop more slowly but maintain their independence. Trust between the different stakeholders is essential. The sudden arrival of a shareholder or an investment fund from outside the company can sometimes destabilize its proper functioning and cohesion.
Companies that perform better than the average
The advantages enjoyed by family businesses often allow them to perform better than the average other business and to attract investors more easily. In 2017, Euronext launched an index focused on family businesses, “Family Business”. Among the 90 stocks in the index, we find companies like LVMH or L’Oréal, but also Derichebourg, Boiron, Bonduelle and Laurent Perrier.
According to data from the investment company Carmignac, family businesses have a better rate of return on equity and a higher financial capacity to repay their debts than other businesses.
For all these reasons, for almost 80 years, ALMIMET has been able to adapt to different developments in the raw materials market while remaining a stable and independent supplier. Our knowledge of the different players and products is based on long-standing and recognized experience, from which we share with our customers every day.