“Family values” may be a corny staple of political rhetoric but as far as hard-headed private bankers are concerned, courting family-run businesses is a smart move as these companies often outperform rival types of firm.

“Family values” may be a corny staple of political rhetoric but as far as hard-headed private bankers are concerned, courting family-run businesses is a smart move as these companies often outperform rival types of firm.

Coutts and JP Morgan, for example, both run annual family business awards events in the UK – JP Morgan is due to announce its winners on 4 June, while Coutts holds a suitably upmarket awards ceremony a few weeks later, on 23 June. A great deal of work goes into picking the winners, which demonstrates how seriously wealth management firms take the sector. This is all great public relations but the seriousness with which the banks take these awards is clear.

And that seriousness is driven by hard numbers. Family businesses account for two out of every three firms in the UK, with about three million such companies in total, employing about 9 million people.

Consider: younger generations of family dynasties can be signed up by a wealth manager that already oversees the affairs of a parent or grandparent. It is all of a piece of “getting them when they’re young”. Connecting with family firms ensures the pipeline of future clients remains busy, which is an important consideration in mature markets such as the UK, as well as the fast-growing economies such as India, which, it should be noted, is dominated by family businesses. And with the biggest family firms, there is the prize of helping such a business dynasty set up a family office - a process that will generate strong fee income - or bringing it into a multi-family office structure.

Research gives support to what private banks are doing. A report issued two years ago by the University of St Gallen in Switzerland concluded that “recent studies provide empirical evidence that family firms are outperforming their non-family counterparts in terms of stock market performance”. Or to put it more simply: family businesses are more profitable over the long run, so their owners will be richer. The St Gallen studies found that “data shows that family firms display more stable earnings per share in contrast to their non-family counterparts”. And it goes without saying that if such family businesses sell up, that produces a hopefully big pile of money for a private bank to run.

There are specific tasks that private banks can and should perform for family businesses. Firstly, such firms may need guidance about succession and financial planning issues – what happens when a business owner is not sure if his son or daughter is up to the job of running a firm? How will inheritance be handled? Secondly, such firms may also be large enough to sustain a bespoke family office of its own to run investments – a private bank can help set such an office up. And, thirdly, family businesses will have capital and funding requirements - such as ways of unlocking the value of illiquid assets - that a private bank, particularly with good access to corporate finance and investment banking, can more easily provide than a regular retail bank can do.

Private banks have certainly been keen to stress continuing problems in the family firm sector, and suggest how to solve them. Credit Suisse, in a report called The Life-Cycle of UK Family Businesses,  pointed out that research from the UK’s official 2006-2007 Annual Small Business Survey showed that 42 per cent of entrepreneurs had no succession plans in place. As reported also this week, some family business issues will take a back seat as a firm struggles to stay afloat in a recession, according to The Wilson Organisation, which is an insurance, risk and financial advisory firm based in Nottingham in the UK's Midlands.

Meanwhile, Barclays Wealth, in conjuction with the Economist Intelligence Unit, has argued that the long-term business values of family businesses mean these firms face a better chance of riding out an economic downturn. With the number of businesses filing for administration up by 124 per cent in the final three months of 2008, the report indicates that businesses could improve their chances of survival by adopting elements of the family business model.

And the family business is a good type of client for private banks to court because they will remind the banks of their own “family values”. In Switzerland, for instance, more than a dozen private banks, bearing the names of their founders and descendants, adopt the model of unlimited liability family partners, as at Pictet and Lombard Odier.

Back in the UK, private banks such as Hoare & Co and the multi-family office, Fleming Family & Partners, are pretty obviously firms that have put great store in a “family” culture. And as they will be only too keen to point out, as some of the large, listed companies in banking and elsewhere have been battered by the financial turmoil, family businesses, including private banks, have arguably fared less badly.

For all that family values can sometimes sound like a meaningless soundbite in a political manifesto, the benefits of pursuing family-run business clients is not one that private banks can ignore. It will reap benefits so long as banks realise that cultivating family businesses is for the long haul and not a marketing ploy. If they get it right, the benefits will cascade down the generations.