Family Business and Private Equity: Conflict or Collaboration? The Case of Messer Griesheim

The Journal of Private Equity, Vol. 13, No. 3, pp. 7-20, Summer 2010

https://doi.org/10.3905/jpe.2010.13.3.007

Posted: 21 May 2019

See all articles by Ann‐Kristin Achleitner

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Kerry Herman

Harvard Business School

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Eva Lutz

Heinrich-Heine-Universität Düsseldorf, Endowed Chair in Entrepreneurship/Entrepreneurial Finance

Date Written: April 1, 2010

Abstract

Privately-held family businesses are usually characterized by concentrated ownership and the involvement of the family in the management as well as the control of the company. Theories of family control offer arguments both for governance benefits as well as costs due to the family involvement. It is therefore not yet fully understood whether buyouts of family firms offer the potential for private equity firms to create value through governance engineering. In addition, conflicts may arise in family firm buyouts due to the shorter investment horizon of private equity firms, compared to the family who is interested in keeping long-term control over the company. Our aim is to investigate these research questions based on an in-depth analysis of the buyout of the German industrial gas company Messer Griesheim by Allianz Capital Partners and Goldman Sachs in 2001. Under private equity ownership, the company was restructured at a critical inflection point and governance benefits were alleviated through closer monitoring of the management, valuable external board members and stronger management incentives. The deal navigated the delicate nature of specific aspects of a private equity-backed family firm and finally led to the family regaining control over a portion of its original businesses after the exit of the private equity firms.

Keywords: Private equity, family firm, employment, corporate governance

JEL Classification: G34

Suggested Citation

Achleitner, Ann-Kristin and Herman, Kerry and Lerner, Josh and Lutz, Eva, Family Business and Private Equity: Conflict or Collaboration? The Case of Messer Griesheim (April 1, 2010). The Journal of Private Equity, Vol. 13, No. 3, pp. 7-20, Summer 2010, https://doi.org/10.3905/jpe.2010.13.3.007, Available at SSRN: https://ssrn.com/abstract=1120222

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Kerry Herman

Harvard Business School ( email )

Cambridge, MA
United States

Josh Lerner

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)

HOME PAGE: http://www.people.hbs.edu/jlerner/

Harvard University - Entrepreneurial Management Unit

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Eva Lutz (Contact Author)

Heinrich-Heine-Universität Düsseldorf, Endowed Chair in Entrepreneurship/Entrepreneurial Finance ( email )

Universitätsstr. 1
Duesseldorf, 40225
Germany

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