KPMG, the international accounting and consultancy firm, has advised family businesses to reach out to angel investors after conducting a survey finding 58% of family businesses struggle to find external financing for investment plans.
KPMG surveyed 125 family businesses about the types of investment they require, their investors of choice and their previous experience of receiving investment from high net worth individuals (HNWIs) or other family businesses.
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Additionally it surveyed 125 HNWIs about their investment strategy and how this might align with family businesses.
KPMG said family businesses create more than 70% of global GDP but that many in its survey said they found fundraising options limited.
The firm said private equity funding often requires the entire business to be sold to maximize value in the event of an exit, and corporate strategic partners often see any investment as part of a longer-term plan to secure full control: as a result of these limitations, KPMG said many family businesses may not be maximizing their growth potential.
KPMG estimated there are up to 14 million HNWIs around the world with around $53 trillion of wealth.
Its survey results showed the top priorities of HNWIs and family owned businesses align: HNWIs name long-term capital appreciation (37%) as a top driver for investment, while family businesses name long-term orientation towards investment returns as their top investor characteristic (23%).
Christophe Bernard, KPMG’s global head of family business, said; "From the survey, education and awareness on the potential benefits of these partnerships have emerged as important first steps to link these two groups. This report has revealed some important misconceptions on the sides of both family members and HNWIs."
By Brian Cantwell
