New Allies

In the past few years, family businesses and private investors have begun taking sidelong glances at each other--something they've rarely done before. The reason: They're beginning to need each other.

The good news for family businesses is the investment capital pool is getting deeper, according to François de Visscher, president of de Visscher & Co, a Greenwich, Connecticut, company that specializes in finding capital for family-owned businesses. The soaring stock market of the past few years has netted investors sizable profits, which many have harvested. Reluctant to jump back into a pricey market, many investors are looking for new places to put their money. When they look at the numbers, they're finding family businesses may be the answer: At least 2 million family firms in the United States have revenues greater than $1 million, and 31,000 have annual sales topping $25 million.

And their growth shows no sign of slowing. Ideas of change and expansion are motivating second- and third-generation owners now taking over the businesses started by parents and grandparents. They're not as leery of private investors as their forefathers--and they need capital to turn their ideas into reality.

This article was originally published in the July 1997 print edition of Entrepreneur with the headline: New Allies.