This year’s Forbes World Billionaires list has the usual array of facts about billionaires and their wealth. Here’s just a few: the total number of billionaires went up by 219 to a staggering 1,645; their total wealth rose $1t to $6.4t; and Bill Gates is the world’s wealthiest person, with a fortune estimated at $76b.
Here are some facts that are less well known but, arguably, even more significant. Around 40% of billionaires on the list derive their wealth from family businesses. By a family business, we mean it is at least 20% controlled by the family and there is some multigenerational aspect to it in terms of control or management.
Indeed, the further up you go on the list, the more prevalent family business wealth becomes. Fifty-five of the wealthiest 100 billionaires are family business leaders or owners, including 6 of the top 10.
This shows that family businesses are the single biggest contributor to global wealth. That’s pretty impressive and testament to the importance of the sector to the world economy.
These numbers also help to debunk some myths around the family business sector.
- Where wealth comes from: The view that most wealth in the 21st century derives from tech entrepreneurs and financiers is in fact wrong. Yes, these wealth creators appear on the list. But they aren’t nearly as prevalent as family businesses and multigenerational wealth.
- Size of business: The view that family businesses are all small, or medium-sized, is obviously refuted by the Forbes list. In fact, as the list clearly shows, some of the biggest companies in the world are family controlled.
- Contribution to global wealth: The view that family businesses will be squeezed as capital markets become more sophisticated is disproved by the Forbes list. The large number of family businesses on the list is testament to the sector’s vibrancy. Indeed, if anything, family businesses are more prevalent today than they were 20 years ago.
Is there a better advertisement for family businesses? I doubt it. Maybe the Forbes family that owns the eponymous publication is proud that family businesses feature so prominently on the list. After all, they themselves are a third-generation family business.
David Bain, Business journalist, Editor of EY Family Business Blog