Bombardier among outperforming businesses: National Bank
- September 12, 2018
The National Bank of Canada says Canada’s 43 most prominent family controlled businesses – a group which includes Bombardier – “sustainably” outperform the S&P TSX composite index.
“The Family Advantage,” the bank's analysis of companies including Bombardier, Loblaw Companies, Rogers and Shopify, says these businesses have achieved an absolute return rate of 206 per cent over the last 13 years. That rate is higher than the 133 per cent S&P TSX composite total return over the same period between June 2005 and June 2018.
The study also says returns for the family-run companies were about nine per cent on an annualized basis, compared to 6.7 per cent for the S&P TSX composite total return index.
The bank's conclusions are based on an analysis of companies where a founding family or founder controls 10 per cent or more voting rights or an individual and related entities with ownership controls 33.3 per cent or more of voting rights.
Key advantages of family owned businesses include a focus on sustainable long term profitability versus short term results and “a strong corporate culture driven by family values.” That corporate culture includes intangibles such as the values of the founders: entrepreneurship, vision, work ethic, commitment to the communities in which they are involved, personal relationships with stakeholders across the value chain, loyalty and concern for reputation. Preserving the uniqueness of their culture, for instance by avoiding a one size fits all governance model, is also highlighted as a key success factor.
“Canadian family business leaders’ clear alignment of incentives and unwavering commitment to long-term success have led their businesses to develop competitive advantages over the long run in today’s fast-changing business environment,” said Vincent Joli-Coeur, vice c hairman of National Bank of Canada, Financial Markets.
The “Family Advantage” report is available here.