Grant Gordon, director-general of the Institute for Family Business, has said that family firms in the UK are "a crucial breeding ground for entrepreneurial talent", have longer-term horizons than alternative forms of corporate ownership, and have a collective turnover worth double the private equity sector. His comments come in the week that Jon Moulton, Alchemy founder, attacked private equity industry bodies for using "dodgy statistics" to prove the case for private equity. Today, BVCA boss Simon Walker hit back at Moulton’s comments. Speaking at the industry’s Super Return conference, Walker said: "There are enough enemies of capitalism without having to deal with the occasional blasts from within our own ranks." According to the IFB’s new report, "The UK Family Business Sector Report", family firms have a turnover of over £1,000bn, more than double that of the private equity sector. Family firms employ more people in the UK than all FTSE companies combined, contributing more than 30 per cent of overall UK GDP. “For the first time we have a clear picture of the vast scope of the family business contribution to the UK economy. It is no exaggeration to state that the family firm is the backbone of the UK economy, and acts as a positive counterbalance to the more short-term approach of other sectors," said Gordon. Gordon, a fifth generation member of the Scottish family business William Grant & Sons, contrasted family business ownership in the food industry sector with private equity ownership. "Look at Warburton’s," he said. "Everyone knows that is the UK’s leading bread brand. It is a great business, family-owned, with a long-term investment horizon. Contrast that to other brands in the sector that are private equity-owned." Specifically, he referred to Hovis (part of RHM), which was sold to private equity giant Doughty Hanson in 2000 before being floated, where its shares performed badly. RHM was eventually sold to Premier Foods in 2006. Gordon said that family and private equity ownership share similiarities, in that ownership and management are aligned. "The difference is that family firms have a longer-term investment horizon. Although family firms are looking for their business to grow, owners are not always seeking an exit." Click here to read the full IFB report. Click here to read other family business stories.
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