Family Businesses

As in the rest of the world, family firms undertake a significant portion of economic activities in Turkey as well. Since family firms generally operate in a group structure, they are considered to be less likely to be affected by financial crises. Rapid support mechanisms between companies within the group are an important factor that increases resilience in the face of economic difficulties. In the case of a single family business structure, similar resilience can be achieved through the personal assets or resources of family members.

However, once family businesses exceed a certain size, these support mechanisms are likely to be insufficient. If the company has not completed the process of institutionalisation and does not have access to modern financing methods such as capital markets, sustainability can become a serious problem. This situation becomes more evident especially during periods of transition between generations and shortens the lifespan of family businesses.

Lifespan of Family Businesses: Turkey and World Comparison

The average lifespan of family businesses worldwide and in Turkey varies between 25-30 years. However, there are successful family businesses worldwide that exceed this average and continue their operations for many years. Research shows that the majority of family businesses end in the first generation, while those that survive to the third generation are very few. In this context, the following rates are noteworthy for understanding the place of small and medium-sized enterprises in the economy: In addition, the rates of family-owned companies are 97.1 per cent in the USA, 99.8 per cent in Germany, 99.4 per cent in Japan and 98.8 per cent in Turkey. In addition, the rates of family-owned companies are 90 per cent in the USA, 80 per cent in Spain, 95 per cent in Italy, 85 per cent in Switzerland and 95 per cent in Turkey.

Importance of Corporate Governance and the Situation in Turkey

Considering the weight of family businesses in the economic system, it is clear that corporate governance practices are a critical need for these companies. The process of corporate governance should not be limited to the efforts of founding family members; it requires a collective approach to learning and change. However, this transition process brings with it a certain cost and adaptation process.

Most of the family-owned companies operating in Turkey are not at an advanced level in terms of corporate governance practices. Most of these companies still operate with a boss-oriented management approach. However, it is possible to find examples of corporate governance practices in family-owned companies that are publicly traded on Borsa Istanbul. Most of these practices aim to comply with the rules set by regulatory authorities. In addition, there are family companies that have adopted all the requirements of corporate governance and have made significant progress in this area.

Contributions of Going Public to Family Businesses

Going public is seen as an important step in the completion of the institutionalisation process and the implementation of corporate governance practices. This process can increase sustainability by minimising the problems encountered in the intergenerational transition of family businesses. Funds raised through public offerings provide a low-cost financing alternative, while at the same time contributing to the company's adoption of corporate governance principles such as transparency and accountability.

Going public not only provides access to financial resources, but also increases the recognition of the company, strengthens its brand value and provides a competitive advantage. In this way, family businesses gain both a corporate identity and a sustainable structure. Therefore, the IPO decision should be considered as a strategic step for family firms to realise their financial and managerial objectives at the same time.

Adoption of institutionalisation and corporate governance principles is inevitable in order to increase the sustainability of family businesses in Turkey and ensure their successful transfer to future generations. Going public is an important part of this transformation, adding both financial and managerial value to companies. Family companies can create a long-term success story by utilising this opportunity.