Britain’s family businesses are flourishing. From brewing to fishing, automotive to real ale, there is barely a sector of British life that isn’t served by such concerns. No throwback to a former age, they make a massive contribution to the economy of the country, employing millions of workers.
There are those who are central to the country, who are focused, midsized world-leading innovators.
There are firms for whom fashionable ideas such as corporate social responsibility have been part of their practices for generations.
In partnership with Credit Suisse, we studied those companies where the ownership of the eventual holding company had passed through at least one generation. We looked for those companies that had demonstrated growth in turnover and shareholders’ funds over the past five years.
Of course, analysing the financial data of family companies is more of an art than a science. They convey an impression, rather than a forensic insight. But that impression is a positive one: these companies have increased the value of the shareholders’ equity.
It’s not just that the businesses have grown – they have become more valuable.
Indeed, it is becoming more evident that the mixture of family ownership with a public market quotation may just be the most powerful of all combinations. There are some quoted family companies in this selection, such as the recently floated Dunelm and the recent merger of Charles Wells & Youngs breweries.
Dr Panikkos Poutziouris of Manchester Business School, identifying 42 companies in the FTSE-All Share as family controlled PLCs, reported that they out-performed their peers by 40 per cent between 1999 to 2005.
In pan-European research by Credit Suisse, European stocks with a significant family influence have outperformed in their respective sectors by an average eight per cent since 1996. These results were so compelling that they led Credit Suisse to develop an index of companies with significant family influence to give investors access to this area.
Many of the sectors in which family firms flourish boast strong cash-flows. While this is a source of strength, it may also be an underused asset.
“We come across many companies that don’t look at securitising their cash flow,” says Charlie Egerton- Warburton, head of onshore private banking for UK and Ireland at Credit Suisse.
“I’m not sure that this is any more prevalent among family companies but there is a lot of money available, and companies aren’t always borrowing money as efficiently as they could. A family firm with predictable revenue streams should certainly look at securitisation.”
Credit Suisse also helps family businesses via monetisation. Often, stakeholders in such firms do not want to sell to outsiders, so can use their stakes as loan equity without ceding control.
The message is clear: the family firm is not a hangover from former times. With judicious management, they make a powerful contribution to the UK economy.
A caveat: our listing is not definitive. We omitted some of the best-known dynasties – such as Sainsbury or Rothschild or the Weston family’s Associated British Foods – because we didn’t want to fill it with obvious names.
There will be sins of omission. We want to provide a snapshot of the diversity, national spread, and economic contribution of Britain’s family businesses.
But what a snapshot it is. Spectacularly global brands such as JCB and Grant’s whisky sit alongside respected national ones such as Warburton’s bread and Irn-Bru.
There are companies with rich histories – Heygates mills flour on a site that was recorded as a mill in the Domesday Book.
Brintons has been making carpets in Kidderminster for more than 200 years. Berry Bros & Rudd was founded in 1698 and is still based in its original premises.
There are businesses that have grown and diversified, adapting to the changes in their local economy.
J&J Denholm, which started in Greenock in 1866, has reinvented itself numerous times. Founded as a ship agency, it became a substantial ship-owner. After World War II, however, the company was left with only two ships.
Today, it is still a leading ship agency, but also has significant interests in areas such as fish catching and processing, industrial and oilfield services.
Others have extended their reach while staying relentlessly focused on their core business. In Hull, the Andrew Marr International Group remains all about fish – trading and marketing seafood, managing fishing vessels, manufacturing ice and seafood, and providing storage facilities.
There are business sectors in which family firms clearly flourish. Retailing, which rewards strong personality, entrepreneurial flair and excellent supplier relationships, is one.
So we find several motor dealers: Isaac Agnew is the leading name in Northern Ireland, while the Tordoff family of JCT600 sell Bentleys and Mazdas throughout the north of England.
Department stores are run by The Fenwick Group and JH Leeke and Sons, while the Lakeland kitchenware mail order business is also very successful.
And we couldn’t resist including our revered columnist’s company, which is a byword for service – Timpson. Many of the nation’s corner shops are serviced by longestablished wholesalers – AF Blakemore in the West Midlands, and CJ Lang in Scotland.
Similarly, independent hardware retailers are looked after by Draper Tool Hire, a business started by Bert Draper in 1919 selling government surplus and tools from a hand barrow in Kingston-upon-Thames.
A traditional industry will lead you to many flourishing family firms. Food manufacturing is a classic example: the Baxters have been making soup for more than 125 years, while the Samworths have built one of the country’s largest family firms, having started in business by selling such foodstuffs as pork pies and other staples beloved by the country’s long-distance drivers.
Then there’s the Warburtons, who make bread in Bolton, and the Staughtons who brew beer in Cornwall. Albert Bartlett is Britain’s largest grower of root vegetables. Fresca Group, owned by the Mack family, is the country’s largest fresh produce company.
In jewellery, Graff Diamonds is one of the globe’s leading brands, the firm having been founded by Laurence Graff in 1962. It now has outlets from New York to Monte Carlo, Moscow to Dubai. Property, construction, house building and civil engineering boast a wealth of family companies.
London’s water mains are being replaced by Clancy Docwra; Norwich Cathedral is being restored by RG Carter. And then there are the companies with deep technical know-how and a world-wide reach.
Stannah Group is the world champion in stairlifts; Martin- Baker the supreme expert in ejector seat mechanisms for aircraft; no company knows more about push-in fittings for pipes and plastic plumbing than John Guest.
Family firms are the dominant form of ownership of companies in the private sector.
For all the different definitions and uncertainties surrounding the data, there can be no doubting that that they account for around two-thirds of all enterprises and employ many millions of people. Most of them are genuinely small businesses.