Family Business Report 2025: KPMG Insights for Growth

The Hidden Engine of Growth: How Top Family Businesses Are Rewriting the Rules of Success

In the world of global economics, family businesses are not just participants; they are the bedrock. Representing an estimated 70% of all businesses and a significant portion of global GDP, their influence is profound. Yet, the path to sustainable, multi-generational growth is fraught with complexity. How does a family business growth evolve from a founder-led operation to a legacy-driven enterprise that thrives across centuries?

The Global Family Business Report 2025, a collaborative study by KPMG Private Enterprise and the STEP Project Global Consortium, provides unprecedented insights. Surveying nearly 2,700 family businesses across 80 countries, the report moves beyond theory to deliver actionable, evidence-based strategies. The core finding? Sustainable growth is no longer just about financial metrics; it’s a strategic fusion of purpose, governance, and values.

For family business leaders, private equity investors, and transformational advisors, this report is a roadmap. It reveals that the most successful family businesses are those that learn to grow better, not just bigger.

Family Business Report 2025: KPMG Insights for Growth

Redefining Success: From “Shirtsleeves to Shirtsleeves” to Transgenerational Entrepreneurship

The old adage “shirtsleeves to shirtsleeves in three generations” haunts many family enterprises. It speaks to the perceived inevitability of decline. However, modern family businesses are shattering this myth by fundamentally redefining what success means.

The report identifies a powerful catalyst for family business growth and longevity: Transgenerational Entrepreneurship (TES). This is the unique ability to instill an entrepreneurial mindset while leveraging familial resources across generations. It’s not merely about passing down a business; it’s about passing down an innovative, adaptive, and opportunity-seeking culture.

The Data Speaks Volumes: The research shows that family businesses exhibiting high levels of TES are over 40% more likely to be high-performing. Furthermore, 46% of the global sample demonstrated high TES, closely linked to strong financial performance and enhanced social and environmental impact.

This evolution often mirrors a structural journey:

Family in Business: Founder-led, centralized control.
Business Family: Professionalized, with structured governance, boards, and family councils. Think of the globally influential Agnelli family (Exor) or the Walton family (Walmart), who maintain influence through values and governance while leveraging professional management.
Family Enterprise: The family’s vision expands beyond the core operating business to encompass a diversified portfolio, often managed through a family office, focusing on growing total family capital—financial, human, social, and intellectual.

This transition is a conscious move from defining success by mere succession to achieving a meaningful transition of purpose and capital across generations.

The Unignorable Link: Governance as the Family Business Growth Accelerator

If purpose is the compass, governance is the engine. The report’s data makes an unequivocal case: formal governance structures are a primary differentiator for high-performing family businesses.

Key Findings on Governance:

67% of high-performing businesses had a formal board, compared to 61% of the global sample.
In Europe, 72% of high performers had a board (a 16% increase over the regional average).
The presence of a formal board made businesses 10% more likely to be high-performing globally.

Why does this simple structure have such an impact? Scale plays a role, driving economic advantages and regulatory needs. But more importantly, a well-constituted board introduces accountability, diverse perspectives, and strategic oversight. It helps separate family roles from business roles—a critical step in reducing conflict and making merit-based decisions.

Building a Board for the Future

An effective family business board is not a ceremonial entity. The report outlines its hallmarks:

Strategic Alignment & Diverse Composition: Balances family wisdom with independent, external expertise.
Champion of Innovation: Actively fosters an entrepreneurial culture, encouraging investment in new technologies and ideas. Notably, 46% of high-performing businesses exhibited high levels of innovation.
Clear Roles & Accountability: Defines responsibilities and implements regular performance reviews.
Succession Steward: Ensures smooth leadership transitions by identifying and developing future leaders based on merit.

formal governance structures are a primary differentiator for high-performing family businesses.

For a family business, establishing or revitalizing its board is not an admission of weakness but a declaration of intent for enduring, strategic growth.

Sustainability: The Strategic Growth Driver, Not a Side Project

One of the most significant shifts in the family business landscape is the move of sustainability from a CSR initiative to a core strategic growth driver. For families with a inherent long-term vision, integrating Environmental, Social, and Governance (ESG) principles is often an extension of their values.

The report found that 48% of family businesses exhibited ‘high sustainability,’ and these businesses were 15% more likely to have a formal board. This highlights governance as the enabler for systematic ESG integration.

The Sustainability Performance Advantage: A staggering 80% of family firms reporting high financial performance also exhibited medium-to-high levels of sustainability performance. This is not a coincidence. Sustainability drives:

Operational Efficiency: Cost savings from energy reduction and waste minimization.
Brand Loyalty & Market Positioning: Appealing to modern consumers and investors.
Talent Attraction & Retention: Engaging employees who seek purpose-driven work.
Risk Mitigation: Ensuring regulatory compliance and securing a “social license to operate.”

Regional Insights Reveal Priorities:

Middle East & Africa: Show the highest commitment to community orientation.
Europe: Leads in environmental focus, with over 80% of businesses actively saving energy and resources.
The Americas: Prioritize employee health and well-being most strongly.

However, a critical gap remains: less than 50% of family businesses can measure their environmental impact. This presents both a challenge and an opportunity for transformational finance partners to introduce metrics, reporting frameworks, and impact measurement tools that turn sustainability efforts into quantifiable value.

Strategic Growth Levers in Family Business: M&A and the Intelligent Use of Capital

Growth for mature family businesses often requires looking outward. Mergers and Acquisitions (M&A) and strategic capital partnerships have become essential tools for scaling, accessing new markets, and injecting innovation.

The M&A Landscape in Family Business:

Family businesses engaged in M&A activity exhibited, on average, 14% higher business performance.
Over 60% of these acquisitions were of other family businesses, indicating a preference for cultural alignment.
This activity is most common among larger, well-governed firms with experienced (often Baby Boomer) leadership and formal boards (73% had boards).

Over 60% of these acquisitions were of other family businesses, indicating a preference for cultural alignment.

M&A is pursued for key strategic reasons: unlocking underutilized growth potential, improving operational efficiency, and solving succession planning challenges by providing liquidity or professionalizing the structure.

The Private Equity & Family Office Bridge

As a wave of generational transition approaches, family businesses have more options than the binary “sell or succeed.” Growth capital and succession capital from private equity (PE) firms and family offices offer a transformative “third path.”

Why This Partnership Works:

For the Family Business: Provides capital and expertise for scaling, while allowing the family to retain significant equity, values, and legacy.
For the PE/Family Office: Gains access to well-run, stable businesses with strong market positions and long-term vision.

The report emphasizes that successful partnerships hinge on:

Alignment of Interests: Matching the long-term vision of the family with the funder’s strategy.
Cultural Fit: Extensive due diligence beyond finances to ensure shared values.
Flexible Deal Structures: Considering partial buyouts, growth equity, and recapitalizations to meet specific family goals.

The Family Office: Architect of Legacy and Growth

As a family enterprise evolves, managing wealth, investments, and philanthropy can distract from the core business. This is where the Family Office transitions from a support function to a strategic growth architect.

The report distinguishes between:

Single Family Office (SFO): A standalone entity managing family wealth.
Embedded Family Office (EFO): Integrated within the family enterprise, acting as a separate profit center that sources new investments and manages M&A, deeply aligned with the family’s strategic vision.

A well-planned family office contributes to family business growth by:

Preserving and Growing Capital: Diversifying assets to ensure financial stability.
Institutionalizing Governance: Facilitating succession planning and next-generation leadership development.
Championing Impact Investing: Directing capital towards ESG-aligned opportunities that reinforce the family’s values.
Providing “Patient Capital”: Investing with a multi-generational horizon, unlike traditional fund cycles.

A Call to Action: Measuring What Matters for Long-Term Success

The Global Family Business Report 2025 concludes with a powerful call to action. The coming 5-10 years will separate businesses that merely survive from those that lead with intention.

Family business leaders must ask themselves pivotal questions:

How do we want our business to evolve?
How do we define and measure success?
Do we have the right governance to lead with clarity?
Are we ready to make growth a conscious, values-driven choice?

The answer lies in embracing an integrated strategy where effective governance, purposeful sustainability, and strategic capital allocation work in concert. It requires moving from an owner-operator mindset to a stewardship mindset, where the goal is to nurture and pass on a resilient, adaptable, and impactful enterprise.

How NeoForm Partners with Family Businesses on This Journey

At NeoForm, we understand that financial transformation in private markets—especially within family enterprises—is about more than numbers. It’s about translating legacy and values into a robust, scalable, and future-proof financial architecture.

We partner with family businesses to:

Design & Implement Governance Frameworks: Help establish high-impact boards and family councils that balance tradition with professional rigor.
Develop ESG & Sustainability Roadmaps: Turn values into measurable strategy, identifying risks and opportunities that drive long-term value.
Navigate Strategic Transactions: Provide guidance on M&A, capital raising, and partnerships with private equity or family offices, ensuring alignment with family vision.
Architect Family Office Solutions: Assist in structuring embedded or standalone family offices that manage wealth strategically and support core business growth.

The journey of a family business is unique. Its growth must be too. By leveraging data, embracing structured governance, and aligning capital with purpose, family enterprises can secure not just their legacy, but their future as competitive, innovative, and responsible leaders in the global economy.

🔗 Links for More:

For a deeper analysis of the data and regional insights, download the full KPMG Global family business report 2025 from KPMG website or from NeoForm LinkedIn page.

📌 About NeoForm:

At NeoForm Business Partners, we help private firms and their portfolio companies navigate complexity, build value, and achieve extraordinary results.

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Is your family business built to thrive across generations? Explore NEO Services or contact our partners to learn how to build a governance and growth strategy that protects your legacy while powering your future.