How Family Enterprises Are Evolving
The KPMG Global Family Business Report 2025 offers valuable insights into how family businesses can achieve long-term success through strategic growth, strong governance and purpose-driven leadership. As family enterprises evolve in response to shifting generational roles, greater sustainability demands and the growing use of M&A strategies, this report highlights key trends shaping their future and offers a roadmap for enduring success.
Defining Success in a Modern Era
Today, success for family businesses means more than simply surviving across generations. While continuity remains important, the modern definition of success includes strong financial performance, effective governance, strategic foresight and long-lasting societal impact. In this context, aligning growth strategies with a deeper, long-term purpose is no longer optional – it is essential. Family businesses are increasingly aware that values and vision must go hand-in-hand with profits and performance.
Core Drivers of Family Business Success
1. Growth & Value Creation
Growth remains a fundamental driver for long-term viability. To remain competitive and preserve family legacy, businesses must create value through sustainable expansion. Key actions include:
• Diversifying revenue streams
• Strengthening customer loyalty
• Fostering innovation
• Enhancing financial processes and systems
• Recruiting and retaining top talent
• Building networks and partnerships
• Clearly defining succession plans
Each of these areas supports both resilience and adaptability, enabling businesses to stay ahead of changing market dynamics and shifting stakeholder expectations.
Governance Matters
Good governance underpins all high-performing family businesses. Establishing transparent structures enhances decision-making, prevents conflict and supports strategic agility. High-performing family enterprises often:
• Establish formal Boards of Directors
• Introduce structured processes and defined roles
• Promote diversity in Board composition (e.g., gender, experience, external members)
Strong governance supports not only day-to-day management but also long-term planning, especially during periods of transition and growth.
Scaling with Purpose: Growth Capital & M&A
Access to strategic investment and growth capital is a growing priority. Family businesses are increasingly turning to mergers and acquisitions (M&A) as a tool to:
• Scale operations
• Enter new geographic or product markets
• Drive innovation
• Accelerate digital transformation
Recent data indicates that more than 60% of M&A activity involves family businesses acquiring other family firms. While there is sometimes hesitation due to concerns about loss of control or cultural misalignment, successful acquisitions that align with the core values and long-term goals of the family can significantly enhance financial and strategic outcomes.
Family offices have emerged as vital enablers of this trend. These entities offer specialised financial oversight, helping align investments with both economic goals and family values. Their involvement ensures that capital decisions support intergenerational wealth building, risk management and legacy planning.
Sustainability as a Growth Driver
Sustainability has shifted from a niche interest to a strategic imperative. For family businesses, the integration of environmental, social and governance (ESG) principles enhances resilience, aligns with stakeholder values and delivers measurable financial benefits. Specifically, sustainability initiatives can:
• Lower operating costs through efficiency
• Increase employee engagement and retention
• Improve relationships with customers, suppliers, and investors
• Strengthen brand reputation and market positioning
Family businesses, often closely tied to their communities and guided by generational stewardship, are uniquely positioned to embed sustainability at the heart of their business strategy. This not only secures future success but reinforces their role as responsible corporate citizens.
Future Outlook
• Family businesses must evolve with strong governance, sustainable practices, and strategic investments.
• The next generation has the chance to redefine success - beyond wealth, toward impact and legacy.
Adapting to a New Era: Challenges and Opportunities
Broadening the Definition of Purpose
Younger generations – particularly Millennials and Gen Z – are redefining what it means to lead. These next-generation leaders are driven by impact and purpose. For them, success includes addressing global challenges such as climate change, inequality and community development.
This values-based mindset is transforming strategy and encouraging a long-term view that blends profitability with responsibility. Family businesses are increasingly integrating corporate social responsibility (CSR) into their core operations, enhancing competitiveness while delivering positive outcomes for society.
Digital Transformation
Technological innovation is crucial to maintaining competitiveness, yet many family businesses face obstacles to adoption. Challenges include:
• Resistance to cultural change
• Limited internal expertise
• Financial constraints
Balancing legacy with innovation requires intergenerational collaboration. Younger leaders bring tech fluency and fresh ideas, while senior members contribute deep knowledge, business acumen and relational capital. When both generations work together, the result is often a stronger, more adaptive business model.
Succession Planning
Leadership transition remains one of the most pressing issues for family businesses. As the Baby Boomer generation steps down, succession planning is essential for business continuity and family harmony. Successful succession requires:
• Open and honest communication
• Structured mentorship and leadership development
• A clear, documented succession framework
Without these elements, businesses risk fragmentation, strategic misalignment, and even collapse during generational change.
The Role of Boards and Specialist Advisors
A well-composed board can dramatically enhance governance, agility and strategic thinking. Businesses with diverse, dynamic boards – especially those that include external experts and younger-generation members – tend to perform better and adapt more effectively to change.
Engaging specialist advisors in areas such as finance, tax, legal affairs, and digital strategy can also offer much-needed insight and support. These professionals bring objectivity and technical skills that complement the family’s experience and values.
However, many boards still remain inward-looking and underdeveloped. Expanding board diversity and expertise is a key priority for family businesses that aim to succeed in a more complex, competitive environment.
Looking Ahead: The Road to Enduring Success
The future of family businesses is rich with promise but requires intentional evolution. Those that embrace change – through innovation, governance, sustainability and strategic investment – will not only preserve their legacy but enhance their impact.
To thrive in the coming decades, family businesses must:
• Evolve governance structures and board composition
• Embrace ESG as a strategic advantage
• Pursue purpose-driven growth, including responsible M&A
• Prioritise leadership succession and talent development
• Leverage digital transformation to boost agility and scale
Family enterprises hold a unique position in the global economy. Their long-term perspective, deep community ties and values-driven culture equip them to lead with resilience and integrity.
Ultimately, the success of family businesses depends not just on preserving tradition but on reimagining it. By blending legacy with forward-looking action, they will help shape not only their own future but that of the broader economy and society as well.
By Rennos Ioannides, Board Member, Restructuring and Debt Advisory, Head of the Family Business Unit, and Ioulianna Demetriades, Manager, Deal Advisory, KPMG Limited
- This opinion article first appeared in the 2025 edition of The Cyprus Journal of Wealth Management. Click here to view it. To view the full edition, click here
