Family-run enterprises often carry an air of being outmoded. When a family maintains significant control over a company across generations, it’s easy to imagine outdated production methods, minimal corporate governance, and resistance to change.

However, studies reveal that family businesses can be highly lucrative. Until 2023, Credit Suisse conducted an extensive study focusing on the Family 1000, a collection of global publicly traded companies where familial ownership exceeds 20 percent. Remarkably, these firms consistently outperformed their counterparts by an impressive 3 percent margin.

What contributes to the superior performance of family-owned companies? Experts frequently point out their focus on long-term wealth preservation rather than chasing the latest trends. Additionally, they often serve as stable anchors during economic downturns.

For investors, the challenge lies in pinpointing family-backed entities that are also progressive. Here are three such companies worth considering as enduring investments you might hand down to future generations.

Goodwin PLC

Goodwin PLC, led by the sixth generation of the Goodwin family, has been a preferred choice for Midas for years.

Despite being a manufacturer of radars, Goodwin PLC excels at staying under the radar. Many would struggle to describe what this Stoke-on-Trent company actually produces.

Legacy: Manufacturer Goodwin ranges from jewellery to submarine components

You’ll find Goodwin products in sectors as diverse as jewellery, where it provides moulds, and fire safety, where it has a product specifically to extinguish dangerous lithium battery fires.

Manufacturing in ten countries, it also has products squarely in the defence sector, including components for submarines, and makes air traffic control systems.

If you invest in Goodwin, you have to accept that the family calls the shots – they own more than half the shares. Furthermore, you’ll have no change out of £200 when you buy just one share. That means that investors who bought into this business when Midas last looked at it at £50.40 in 2023 have done exceptionally well.

But why should investors still buy in?

Firstly, because other companies find it hard to do what Goodwin does. The business has one of only five foundries worldwide that can cast components for frigates and submarines. Getting that accreditation took seven years, so no fly-by-night company is going to take the business.

Secondly, because the business is firing on all cylinders.

The latest trading statement, last week, stated that it would see double the trading profit before tax for this financial year compared with last, with a £365 million orderbook behind it.

The company is paying an extra dividend of 532p a share to those who are on the Shareholder Register on November 7.

The dividend will be paid out before any Budget announcements – the sort of foresight you might expect from a family-owned business with its own interests at heart. Buy.

Ticker GDWN Traded on: Main market Contact: goodwin.co.uk/investors

Caledonia Investment Trust

Feel like a shipping magnate by snapping up shares in Caledonia Investment Trust – the listed investment portfolio of the ultra-wealthy Cayzer family.

The descendants of Sir Charles Cayzer own half of the shares in the company, and any commoner can buy into the rest.

The investment team running the trust boasts that the family involvement allows them to think in ‘decades, not quarters’, and to buy and sell only when the time is right. The aim is to outperform inflation by 3 per cent over the medium and long term.

The investments inside Caledonia are diverse, with a third in public companies, just under a third in private capital and a similar percentage in global funds.

Long-term growth: The investment team running the Caledonia Investment Trust boasts that the family involvement allows them to think in ‘decades, not quarters’

By buying into Caledonia you take a bite of familiar names such as Microsoft, Philip Morris and AliBaba, but also a slice of the private company that provides tyre pump machines at petrol forecourts and wealth manager for the rich Stonehage Fleming.

Caledonia’s shares trade at a persistent discount to the net asset value, currently around 32 per cent. More recently though, the company has started to do something about narrowing that discount, buying back its own shares and initiating a share split to make it easier to buy and sell shares.

Narrowing the discount is something that should be in all shareholders’ interests. This is not an investment for the short term.

Ticker: CLDN Traded on: Main market Contact: caledonia.com/shareholder-centre

Associated British Foods

AB Foods is confusing enough before you even look at its family holding structure.

The company owns uneasy bedfellows Twinings and Primark, and adds in British Sugar and a Chinese animal feed business to complete the set.

Trusted brand: ABF owns brands such as Twinings

The multinational says that this breadth is one of its strengths. 

However, it doesn’t apply the same boast to its shareholder register, with over half of the shares held by holding company Wittington Investments, which is in turn owned by the Weston family and their charitable trust, the Garfield Weston Foundation.

AB Foods’ recent performance has been a mixed bag, with a trading statement in September guiding us towards the full-year figures coming up on November 4.

So why buy into ABF? Firstly, Primark remains an innovator and a strong presence in the clothing sector. And ABF’s diversified geographical footprint and business types mean that one area can often compensate for another.

The shares have had a good run – up 12 per cent this month and up 3.42 per cent since last year.

The shares, trading on 11 times their expected earnings, are cheaper than M&S and Next. There’s also a dividend yield of nearly 3 per cent.

Volatile times seem likely to continue for AB Foods, but in the long term it’s a business that has weathered many storms.

Ticker: ABF Traded on: Main market Contact: abf.co.uk/investors

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