It is estimated that family businesses make up close to 90% of all business enterprises in North America. Despite this high number, only 30% of them end up passing the business on to the second generation. Of the 30%, only 12% continue to the third generation and then 3% live on to see a fourth.
In spite of this, not all family businesses are destined to disappear – many have gone on to become the biggest companies in the U.S.
The top 5 largest family businesses in the USA:
5. Koch Industries
Revenue (2014): $115 billion
Fred C. Koch formed the Winkler-Koch Engineering in 1925, which developed a more efficient thermal cracking process for turning crude oil into gasoline. This process threatened the competitive advantage of established oil companies, which sued for patent infringement, forcing the business out of the U.S. and relocating in the Soviet Union. During this time, Koch came to despise communism and wrote how the country was “a land of hunger, misery, and terror.”
Under subsequent Koch family guidance, Koch Industries expanded massively into manufacturing, energy, and commodities trading, making it the second-largest privately held company in the U.S. Fred Koch’s sons Charles Koch, chairman of the board and CEO, and David H. Koch, executive vice president, are principal owners of the company after they bought out their brothers’ shares for $1.1 billion.
The Koch brothers each own a 42% stake of the company worth $41.1 billion apiece and are two of the four richest Americans. Charles has stated that the company would go public “over my dead body”.
Revenue (2015 FY): $120.4 billion
Cargill is the largest privately held corporation in the United States with operations food, agriculture, and commodities trading. However, its beginnings were much more humble when it was founded by William W. Cargill when he bought a grain flat house in Iowa. With his two brothers, the Cargill company expanded its operations into elevators, grains, and meats.
Today, Cargill is responsible for 25% of all United States grain exports and supplies about 22% of the U.S. domestic meat market. In addition, all of the eggs used in McDonald’s restaurants in the U.S. pass through Cargill’s plants. The Cargill family controls 90% of the company and is one of the richest families in the world, although the exact wealth of the family is unknown because Cargill is privately-owned and not subjected to earnings disclosures.
Revenue (2014): $135.8 billion
Ford is a perfect example of the adage, “Third time’s a charm”. Henry Ford’s first company was called Detroit Automobile Company, which had to be reorganized into the Henry Ford Company only two years after it was founded. However, the Henry Ford Company also failed, and with only the rights to his name and $900, Ford left the company. He went on to find new investors and in 1903 formed the Ford Motor Company, which has grown into the second-largest U.S.-based automaker and fifth in the world in 2010.
Throughout its lengthy history, the company has largely remained in the Ford family’s control. Henry Ford ran the company until 1918, after which his son Ensel took over and ran the company until his death in 1943. After Ensel’s death, Henry regained the presidency of the company for two years until he ceded the presidency due to failing health. His grandson Henry Ford II took over the helm until 1979.
For the next 20 years, no Ford family members held any leadership roles until William Clay Ford Jr. regained leadership when he became Chairman of the Board in 1999.
2. Berkshire Hathaway
Revenue (2015 FY): $194.7 billion
Berkshire Hathaway was first known as the Valley Falls Company, which was founded by Oliver Chace in 1839. Known as America’s first successful textile mill, Valleys Falls undertook a series of acquisitions and mergers, ultimately merging with the Berkshire Cotton Manufacturing Company to become Berkshire Fine Spinning Associates. In the 1950s, the company again merged with the Hathaway Manufacturing Company, resulting in a huge operation with 15 plants and over 12,000 employees. But by the end of the decade, the company
But by the end of the decade, the company suffered from the downturn of the textile industry. In 1962, Warren Buffet began buying shares in the company and ultimately left the failing textile business and expanded into insurance and other investments. Today, it is one of the most successful investment and holding companies in the world, with shares of Coca-Cola, Wells Fargo, and IBM.
The Chace family remained involved in the company even after Buffet took control, with family member Malcom Chace Jr. holding on to his shares and staying on the board of directors. His son directed the company until he was replaced in 2007.
Revenue (2015 FY): $485.7 billion
Employees: 1.4 million
The retail giant Walmart opened its first store in 1962 in Rogers, Arkansas. The store was a second business venture by Sam Walton, where he established the practices that define present-day Wal-Mart. He kept prices as low as possible, stocked a wide range of goods, and stayed open longer than anyone else. The success of this store led him to evolve and expand his business, and within a decade, Walmart was generating millions in sales had gone national.
Today, Walmart has grown to become the largest family-owned business in the U.S., and is the largest retail establishment in the entire world with over 11,500 stores in 28 countries. Sam Walton maintained ownership of the company until his death in 1992. His son Rob inherited the company, which he headed until 2015 when Rob’s son-in-law Greg Penner succeeded him as Chairman of Walmart.
The 4 remaining members of the Walton family are among the wealthiest people in the world and are nearly as rich as Warren Buffett and Bill Gates combined.