While many Millennials and Gen Z adults are involved in their family business, a small share of younger members have a management role, the study – based in Italy – found.

A study of Italian family-run businesses shows a big gap between how young and old adults become involved in running these firms. 

The report is among several studies probing the dynamics of family-owned businesses – an important target market for wealth managers, banks, law firms and other professionals. This news service publishes regular commentary on the need for succession planning and preparing rising generations to take over the reins.

The report from law firm Withers, BNP Paribas and POLIMI School of Management found that 72 per cent of Millennials and 59 per cent of Gen Z are already involved in their family business, often occupying business and governance roles.

The quantitative research was developed through a questionnaire administered to a population of individuals belonging to the next generation, involving respondents from the Millennial generation (born between 1981 and 1994)
and Gen Z (born between 1995 and 2007). The sample comprises 819 complete responses, 230 of which were provided by members of entrepreneurial families that own or have owned a business.

“It is essential that families define clear rules of participation to translate the younger generations' perspectives into continuity and growth for the family assets and business,” Roberta Crivellaro, managing partner of Withers' Italian practice, said. “Tools such as family governance agreements, statutory clauses and family constitutions promote transparent and inclusive governance."

However, only 15 per cent of these younger family members report having management responsibilities, with older generations holding on to the control of strategic business decisions.

The average age of family members actively entering their business is 26. These are usually in operational roles to gain experience, even if they have already obtained this in other organisations, the report said.

The gender balance between Millennial family members involved in their business is 90 per cent men and 57 per cent women, while this shifts to 44 per cent men and 47 per cent women among Gen Z family members.

“There are already clear differences in how the emerging generations relate to their family's assets, with Gen Z family members identifying wealth as personal and family property, while Millennials conceive it as a collective good, to be increased and shared,” Crivellaro said. “Their investment choices also reflect differing viewpoints, with Millennials prefering traditional options such as real estate, bonds and financial securities, while Gen Z leans more towards digital assets, startups and alternative investments."

Among other recent surveys of family firms, KPMG for example, reported that many business families are facing a new reality in terms of how they create wealth and allocate their capital. After a lifetime of having the family’s wealth almost entirely bound up in their business, business families are recognising that they need to de-risk and diversify their wealth in today’s more volatile and unpredictable environment.