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European Family Business Barometer 2019: Innovation in Focus

European Family Business Barometer 2019

Our survey shows: German family entrepreneurs are looking less confidentially into the future, not only in comparison to one year ago, but also in comparison to other European companies.

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Dr. Vera-Carina Elter

Vorstand für Personal & Familienunternehmen

KPMG AG Wirtschaftsprüfungsgesellschaft

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European Family Business Barometer

Recruiting top talent for family companies in Germany and Europe remains difficult. These are the key results of KMPG’s Eighth “Family Business Barometer”. The survey was the result of cooperation between the European Family Businesses (EFB) and the DIE FAMILIENUNTERNEHMER Association.

Two of three surveyed German family companies (65 percent) stated recruiting specialists was the greatest current challenge, just as was the case in the “Family Business Barometer” one year ago. At European level, the share of family companies which regard a shortage of specialists as one of the greatest difficulties is 63 percent, after 53 percent the previous year.

For the current “Family Business Barometer” a total of more than 1,600 family companies from 26 European countries were surveyed in the summer of 2019. From Germany 305 family entrepreneurs participated. We are presenting you their results as a special German assessment with the key focus areas of growth, digital transformation and share sales.

Further key challenges cited by German family companies were the change of legal regulations (73 percent) and political uncertainty (62 percent).

Reinhold von Eben-Worlée, President of DIE FAMILIENUNTERNEHMER e.V. comments: “With many technical innovations, family entrepreneurs in Germany have a very good positioning. In times of increasing global uncertainty, politicians in Germany and Europe must increase planning security for companies located in Europe. In respect to answers about climate change, for example, reliable and realistic targets were necessary, but even more important were relevant plans for implementation.”

A further issue which concerns many family entrepreneurs in Germany is cyber security (62 percent). For family companies in Europe this topic is less important overall. On the other hand, declining profitability is a particular concern for many European entrepreneurs – an aspect which is somewhat less relevant for Germany family companies.

Optimism ebbing

Sentiment among German family entrepreneurs has clouded over. Only every second company (50 percent) is optimistic in respect to the next twelve months. In the survey one year ago, the equivalent figure was still 68 percent. This makes the Germans more conservative than family companies at European level where 62 percent feel positive moving forwards (2018: 73 percent).

At the same time, the share of family companies which could increase sales by up to 50 per cent was lower in Germany than in Europe as a whole (50 percent versus 59 percent).

Innovation more strongly focussed

Family companies react to the uncertain dynamic situation by placing innovation in the foreground. Almost three quarters of the surveyed European family companies (72 percent) indicated that over the next two years it was very important or extremely important to become more innovative. In Germany the share is 64 percent.

Family companies are strongly aligned to innovation. For this reason, many German family companies invest in innovation hubs and work together with smaller, more agile start-ups – whether in the form of direct investments, cooperations, joint product developments or in other ways. Working together with start-ups allows family companies to deal with new business areas and ideas, something needed to make rapid progress and accelerate innovations,” commented Dr. Vera-Carina Elter, Managing Partner for Human Resources & Family-Owned Businesses at KPMG in Germany.

Succession remains a big issue

To transfer company control to the next generation is one of the greatest tasks in family-managed companies. 40 percent of German and 32 percent of European family entrepreneurs stated that identifying the successor was the greatest challenge. It was also difficult to motivate successors to take up their positions (34 percent Germany, 29 percent Europe).

Special assessment Germany: Overview

German family companies are increasingly broadening their international activities – the focus is shifting from Europe to areas outside our continent. The appeal of Africa as a growth market is growing particularly strongly. One year ago, only 0.4 percent of family entrepreneurs could imagine business activities on the continent. Now it is 3 percent. For Asia the interest climbed from 5 to 12 percent. At the same time, the importance of North, Central and South America increased. The weighting for European activities is correspondingly lower. However, the share of those which currently are not pursuing any growth plans has also moved upwards, from 32 percent to 37 percent.

Family companies in Germany are dealing intensively with digital transformation. The strategic assessment of data (Data & Analytics) continues to be the most important topic. However, the companies are increasingly extending their view to other issues. Thus, data storage in cloud applications is playing an increasingly important role.

In which areas do family companies in Germany and Europe want to invest over the next twelve months? What financing options do they find particularly attractive? What is the status of governance structures in German and European family companies? What options are German family entrepreneurs considering in the case of share sales?

You will find the answers to these and other questions here:

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