Family Business Scale-ups: Breaking Barriers to Growth
Definitions and methods
some family businesses will not be captured by this method, for example when family names might differ, e.g. owing to marriage or among different branches of the same family, or where family trusts are involved in the ownership structures. Furthermore, this method might also on occasion pick up businesses that are not family-run but merely involve individuals with a common last name, e.g. Smith or Jones, but who are otherwise unrelated. Additionally, depending on the size of the enterprise, businesses must comply with different reporting requirements. Only those meeting at least two of the following criteria are required to file full accounts: a turnover greater than £10.2 million, assets exceeding £5.1 million, and/or more than 50 employees.
The analysis in chapters two, three and four of this report has been conducted by the ScaleUp Institute using live data from Companies House, accessed via a range of data platforms 5 to create a full picture of the family business ecosystem. By applying the definitions above we have been able for the first time to create an assessment of family businesses in the UK based on firm- level data, with a particular focus on the mid-market and scaling segments of family firms. As with all research methods there are limitations and challenges in this approach; for example there is no reporting requirement for companies to specify that they are family-owned, so in order to find out about familial relationships between shareholders and directors, an assumption must be made that these individuals will share the same last name. This means that
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Family Business A family (two or more individuals with the same last name) holds a majority stake (50.01%) in the company and one or more people with that same last name are directors of the company. Scaling family businesses A family business defined as fitting the international benchmarks of OECD and Eurostat scaling parameters: this report covers family scale-up businesses that are growing their turnover or employee headcount or both by 20% or more each year over a monitoring period of three years, with at least ten employees at the start of that period and the scaling pipeline of family firms that are growing at a rate of between 10 and 20% by the same parameters. Mid-market family businesses These are defined as firms that meet criterion one and have either or both of the following characteristics: (1) 50 to 499 employees; (2) a turnover of between £10 million and £100 million.
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5 Including mnAi, Beauhurst and Data City.
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