Around two-thirds of Portuguese family businesses are managed by the second and third generations of the family and 20% are even led by the fourth generation. The conclusion is from a study carried out by KPMG with around 2,700 family businesses globally and which surveyed a hundred Portuguese companies. It also states that half of the companies owned by families claim to have multiple generations managing the business, according to a report by ECO.

With an average lifespan of 67 years, which compares to an average age of 42 years for companies globally, only 6% of Portuguese family businesses maintain a 1st generation CEO, shows the study “Enhancing the Legacy – the Growth Path for Family Businesses”, carried out by KPMG, which questioned 2,683 companies from 80 countries.

The survey carried out by KPMG also concludes important changes in the corporate governance of these companies. Around 78% of Portuguese family businesses have a committee of directors to manage the business, with an average of 3.5 people in this management, and globally this percentage drops to 61%, with an average of 5.3 people.

With regard to who owns the capital, the average in Portugal is in line with international responses, with the survey reporting that 88% of family businesses have company shares held by the family, just as in family businesses globally. Within the family, on average 5.57 family members hold shares in the business, the study reveals.

Legacy

The study assessed the importance of family legacy – biological or generational (family name and lineage), material (financial assets, inheritances, etc.), social (relations with the community), identity (company history and rituals), and entrepreneurial ( resilience to new challenges, etc.) – in company business, concluding that companies, where this legacy is stronger, tend to present stronger and more lasting businesses.

45% of family businesses globally, which reported having strong legacies in their companies, also show strong business performance and 53% have high levels in terms of sustainability. “There is a compelling link between the depth of a family business’ legacy, its financial performance, and the strength of its sustainability practices,” the study concludes.

The report also reinforces the importance of transgenerational entrepreneurship as a key factor in the sustained performance of family businesses, with legacy alone being insufficient to guarantee long-term progress. According to the study, legacies are amplified by transgenerational entrepreneurship that forces predecessors to communicate openly and reinforce their business legacies, bridging what can sometimes seem like a generational divide.

“The values ​​that make up the concept of ‘legacy’ connect the generations, ensure the continuity of the business success path, and shape the long-term vision of the family business, guiding some of its options”, explains Luís Magalhães.

For the head of tax at KPMG Portugal, “in the current context, the topic represents a challenge for leaders of family businesses who consider it necessary to address the paradox in the sense of adopting historical and traditional values ​​with current strategies to reinforce the successful business process, building a dynamic, sustainable legacy with value for future generations in mind.”

“Based on the experience we have, working daily with our clients, we are certain that the legacy of the family business contributes to transgenerational entrepreneurship, financial performance and sustainability practices”, adds Luís Magalhães.

Of the approximately one hundred Portuguese companies that responded to the study, 61% are large, with more than 250 employees, 28% are medium-sized and 11% are small, says KPMG. In terms of activity sectors, 73% are service companies, 22% are in the agricultural sector, 3% are industrial and 2% are in the construction sector.